Sure, plan sponsors can find information from the Department of Labor, and they can certainly buy books on the subject (including one I wrote), the depressing truth is that these instructions only apply to the narrow actions of the plan sponsor. 

Unfortunately, the 401(k) plan sponsor is held liable for the actions of every vendor, and – here's the really difficult part – it's hard to know what fiduciary rules (if any) apply to which service providers. That's because at least three different fiduciary standards exist: the tradition trust law variety; the ever-evolving SEC form; and, the much-maligned ERISA version.

The fact services providers can offer one, two or even all three forms of fiduciary standard (as well as a fourth non-fiduciary standard) can only increase the personal risk of every 401(k) plan sponsor, who generally spend their waking hours trying to produce more widgets, not staying up-to-date on the latest in the fiduciary industry.

Imagine your job requires a thirty minute commute. Over the course of your career, you become expert at identifying the perfect car for this route or learn the timing of the nearby public transportation system. Yes, there are subtle changes in the schedules and the usual planned obsolescence with the automotive industry, but you spend your days focused on this and happily arrive at work in a timely fashion.

Now let's say you have to fly across country. That's easy. You just hop on board some random plane and off you go. If you're a plan sponsor, that plane might be represented by an MEP – a plan piloted by someone else that your company merely boards. For most 401(k) plan sponsors, an MEP is not an option.

Rather, they must manufacture and pilot their own plane. Admittedly, they can hire the welders and the engineers and, heck, even the pilots and navigators, but how do they know they're hiring the right folks? And if the plane falls from the sky, guess who gets sued? 

Manufacturing and piloting your own 401(k) plan represents a similar dilemma. Most (especially smaller) plan sponsors don't have the expertise to confidently create and manage retirement plans, yet that's exactly what they're expected to do. You'd think the regulatory industry might support them, but it seems the government has only made things more difficult by allowing service providers to wear too many hats.

Too big to fail might not apply to financial intermediaries, but too small to survive failure remains the unspoken fear of many 401(k) plan sponsors.