Glossary
Plan Sponsor
A plan sponsor is the employer (or union or association) that establishes and maintains a retirement plan for its employees.
Sponsorship carries legal weight: under ERISA, the sponsoring employer — often specific owners or officers — is a fiduciary responsible for running the plan in employees' interests, selecting and monitoring investments and providers, and ensuring fees are reasonable. Sponsors typically hire recordkeepers, third-party administrators, and advisers, but hiring vendors does not by itself transfer the responsibility.
Why it matters in practice
Many small-business owners become plan fiduciaries without realizing it, personally liable for a fund menu they never review. Delegation done formally — a 3(21) co-fiduciary adviser or a 3(38) investment manager — can shift defined pieces of that liability to a professional.
In California
California's mandate makes this decision unavoidable: employers with at least one eligible employee must either sponsor a retirement plan or register for CalSavers.
Related terms: ERISA · Fiduciary · CalSavers · Recordkeeper · Third-Party Administrator