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Q: We are considering hiring a plan advisory firm to provide ERISA 3(38) investment management services. Do you have any current information on the popularity of this service with plan sponsors?
A: You are not alone in considering the services of an ERISA 3(38) investment manager. According to PLANSPONSOR’S 2025 3(38) Investment Manager Survey, nearly 48% of defined contribution plan sponsors reported that they currently use a 3(38) investment manager, and another third reported that they are considering hiring one. Among those that use a 3(38), the primary reasons are to reduce fiduciary liability (73.77%), ensure compliance with ERISA (59.02%) and improve investment performance (55.74%). Factors that count most when selecting a 3(38) provider are: “experience and track record;” “cost of services” and “reputation in the industry.”
Q: Our investment committee is trying to get comprehensive information on alternative investments to better understand how they work, how they might fit within a 401(k) plan and the potential risks involved ― for both our employees as investors and for us as fiduciaries. Can you provide any resources that would give us a thorough perspective?
A: You might consider reviewing a recently published white paper from the Wagner Law Group titled, “Alternative Investments in 401(k) Plans: Executive Order Implications and Key Fiduciary Considerations.” The paper examines the evolving regulatory landscape in this area and discusses the key considerations for plan fiduciaries who are interested in giving their plan participants access to alternative investments through the plan’s investment lineup.
Q: Our recent annual plan review revealed a significant increase in contributions to our Roth 401(k) account option among our younger workers. How does this compare to industry data?
A: Fidelity’s Q3 Retirement Trends analysis found that Roth savings vehicles are increasing in interest among retirement savers — particularly among younger generations — likely due to their tax efficiency over the long term. Third-quarter data show 20% of Gen Z 401(k) participants are choosing to contribute to a Roth 401(k), up from 16% in 2024. The data shows 19% of Millennials contribute to a Roth 401(k).
Kmotion, Inc., 12336 SE Scherrer Street, Happy Valley, OR 97086; 877-306-5055; www.kmotion.com
©2026 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should always consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.
This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied upon for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.