Review and Understand Fee Structures
by Lisa Maniscalco, CPA
As costs continue to rise and plan participants focus more on their retirement savings, the costs of administering retirement plans are under more scrutiny by the participants. In response, the Department of Labor issued fee disclosure regulations under ERISA 408(b)(2). As part of management’s fiduciary responsibility, plan management is responsible for understanding the fee disclosure requirements, making sure the fees from their service providers are reasonable, and ensuring the disclosures are communicated to the plan participants. If the Department of Labor deems the fees unreasonable, the plan sponsor could be subject to penalties, reimbursement to the Plan for excessive fees and potential plan disqualification.
To fulfill this responsibility, plan management should consider evaluating its service provider fees with fees charged by similar providers to determine the fees are reasonable in conjunction with the services provided. It is important the evaluation be ongoing, and the plan sponsor should maintain documentation to support the conclusion.