Although there is no list of approved investments for retirement plans, there are special rules contained in the Employee Retirement Income Security Act of 1974 (ERISA) that apply to retirement plan investments. In general, a plan sponsor or plan administrator of a qualified plan who acts in a fiduciary capacity is required, in investing plan assets, to exercise the judgment that a prudent investor would use in investing for his or her own retirement. (ERISA Section 404) In addition, certain rules apply to specific plan types.

A 3(21) fiduciary is an investment advisor. They provide advice to the plan sponsor but don’t make any decisions themselves about which investments are included in the plan. Plans may task a 3(21) advisor with drafting an investment policy statement for the plan or revising an existing one.

A 3(38) fiduciary manages the portfolio for a retirement plan. They have the authority to buy and sell assets, make strategic decisions, and otherwise handle all aspects of the account’s investing. The duties of this kind of fiduciary are outlined in the Employee Retirement Income Security Act, also known as ERISA.