Plan Fiduciaries are required to know that the service costs are reasonable (ERISA 401(a)(1)(B)) and, as such, have three basic duties regarding the determination of fees:

  • Control and account for all investment-related fees and expenses.
  • Identify every party that has been compensated from portfolio assets; and
  • Demonstrate that a determination was made that the fees and expenses paid to each party were appropriate and reasonable, given the level of services rendered.


“…The plan fiduciaries must also act prudently and in the best interests of plan participants and beneficiaries in the negotiation of the specific formula and methodology under which revenue sharing will be credited to the plan and paid back to the plan or to plan service providers.

Prudence requires that a plan fiduciary, prior to entering into such an arrangement, will understand the formula, methodology and assumptions used by Principal in arriving at the amounts to be returned to the plan or used to pay plan service providers following disclosure by Principal of all relevant information pertaining to the proposed arrangement.

The plan fiduciaries also must be capable of periodically monitoring the actions taken by Principal in the performance of its duties to assure, among other things, that any amounts to which the plan may be entitled under the terms of the arrangement are correctly calculated and applied for the benefit of the plan.”

Types of Fees

  • Investments Fees
  • Administrative Fees
  • Revenue Sharing Fees
  • Fiduciary & Consulting Fee

Who is Collecting Fees?

  • Third party administrator
  • Custodian
  • Recordkeeper
  • Bundled Service Providers (Administrator, Recordkeeper and Custodian)
  • Financial Adviser
  • Third Party Vendors: Such as auditors, brokers, asset managers, or fund managers (Mutual Fund expense ratios)

Analyzing Fees

  • Asset Statement
  • Service Provider Invoices
  • 408(b)(2) Statement

Fee Analysis and Benchmarking

What is the true cost and value of 401(k) plan services?  Are the fees in your plan reasonable for the service you get? As plan fiduciaries, we possess the experience and knowledge to analyze and benchmark your plan fees and implement solutions to control all costs within your plan and provide written evidence that a prudent process is and has been followed.

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