Many plan sponsors self-trustee their plans and retain independent paying agents to process disbursements, effect tax withholding and reporting, prepare Form 1099-R and submit income tax withholding to authorized financial institutions.

Most corporate trustees for participant-directed plans are subject to the direction of the plan sponsor and are thus called "directed trustees". Directed trustees will not be liable for following the instructions of the named fiduciaries.

To the extent that investments are directed by the employer or by plan participants, trustees are not liable for investment decisions. Further, an employer acting as a plan fiduciary may be liable for the directed trustee's acts or omissions as a co-fiduciary under the plan.

Accordingly, it may be advisable for employers to self-trustee their plans and retain an independent paying agent to avoid co-fiduciary liability and a corporate trusteeship fee.