A recordkeeper is generally not a fiduciary, and the reason is discretion. ERISA section 3(21)(A) confers fiduciary status to the extent a person "exercises any discretionary authority or discretionary control respecting management of such plan," renders investment advice for a fee, or has "any discretionary authority or discretionary responsibility in the administration" of the plan. Processing a distribution the plan has approved is ministerial. Deciding whether a participant qualifies for one is discretionary. Most recordkeeping contracts are written to keep the provider firmly on the ministerial side of that line, which is a legitimate arrangement and also the reason the employer cannot treat hiring one as having handed off responsibility.
One limb of that test has no discretion requirement, and it is worth noting. The same sentence also makes a person a fiduciary who "exercises any authority or control respecting management or disposition of [the plan's] assets." A provider that merely handles plan money in the wrong way can therefore be a fiduciary as to that conduct without having exercised any judgment at all, which is why the ministerial framing is a general rule rather than a shield.
Three different services, routinely collapsed into one word. 29 CFR 2550.408b-2(c)(1)(iii)(C) lists "recordkeeping, securities or other investment brokerage, third party administration" as separate items. In practice one firm often sells several of them in a bundle, so a plan may have a single vendor acting as recordkeeper, custodian, and third-party administrator at once. Unbundling matters when something goes wrong, because the duties attached to each service are different, and because the fees for each are disclosed separately.
The fee-disclosure regime, and why it has teeth. ERISA generally forbids a plan from transacting with a party in interest, and a service provider is one. Section 408(b)(2) creates an exemption for reasonable arrangements for necessary services, and the regulation implementing it states that "no contract or arrangement for services between a covered plan and a covered service provider, nor any extension or renewal, is reasonable within the meaning of section 408(b)(2) ... unless the requirements of this paragraph (c)(1) are satisfied." Those requirements are disclosure of compensation, both direct and indirect, to a responsible plan fiduciary. The consequence is sharper than a paperwork rule: without the disclosure the arrangement is not reasonable, the exemption is unavailable, and paying the provider becomes a prohibited transaction. The threshold for being a covered service provider is low, catching anyone who "reasonably expects $1,000 or more in compensation, direct or indirect."
Indirect compensation is where the real cost usually hides. Direct fees are invoiced to the plan or the employer and are easy to see. Indirect compensation, most commonly revenue sharing paid to the recordkeeper out of the expense ratios of the funds in the menu, is deducted inside the investments and never appears as a line item a participant would recognize. This is legal and disclosed, and it is also why two plans with identical quoted recordkeeping fees can cost participants very different amounts. A second rule, 29 CFR 2550.404a-5, requires the participant-facing disclosure, and note where that duty sits: on "the plan administrator, as defined in section 3(16)," not on the recordkeeper, though the administrator may rely in good faith on the data the recordkeeper provides.
One boundary worth knowing: the 408b-2 regime applies to covered pension plans and expressly excludes SEP plans, SIMPLE plans and IRAs, so the disclosure protections do not follow money into an IRA-based arrangement.
