COLLECTED WISDOM™ on Revenue Sharing Within 401k Plans
It is imperative that plan sponsors with fiduciary oversight of their organization's 401k retirement plan understand the distribution systems that most investment management organizations use and how they share revenue, revenue that is an assets of the 401k plan.
Here is information to help you understand the issue of revenue sharing.
New Rules Will Have Fiduciary Impact - Summary: Next year, new federal rules requiring fee disclosures from 401k plan providers make it imperative for companies sponsoring plans to ensure that fees are reasonable. Employers that start preparing now for the new disclosure regime will be ahead of the game.
Source: HREonline.com, November 2011.
How Do the ERISA Recapture Accounts Affect the Fee Disclosure Regulations? - Summary: Payments from an ERISA recapture account affect reporting and disclosure under both the service provider fee disclosure and the participant fee disclosure regulations. In this article discusses the impact.
Source: Sungard/Relius, October 2011.
Application of the Service Provider Fee Disclosure Regulations to TPAs - Summary: TPAs are struggling to determine if and how the new service provider fee disclosure regulations will affect their practices. Many TPAs have determined that they are not subject to the disclosure requirements because they receive their compensation directly from the employer or from the plan. TPAs that have made such determinations may, nevertheless, have concerns because they may receive unanticipated indirect payments from financial institutions to which they refer business. In this article discusses how a TPA deals with unanticipated indirect compensation.
Source: Sungard/Relius, October 2011.
Understanding Retirement Plan Fees And Expenses - Summary: As the sponsor of a retirement plan, you are helping your employees achieve a secure financial future. Sponsoring a plan, however, also means that you, or someone you appoint, will be responsible for making important decisions about the plan's management. Your decisionmaking will include selecting plan investments or investment options and plan service providers. Many of your decisions will require you to understand and evaluate the costs to the plan. This booklet will help you better understand and evaluate your plan's fees and expenses.
Source: U.S. Department of Labor, March 2011.
Allocation of Revenue Sharing - Summary: Most 401k fiduciaries have not focused on properly allocating the revenue sharing received by their plan's recordkeeper. In fact, it is possible that many plan fiduciaries are not aware that their recordkeepers are receiving revenue sharing from the investments, while others may assume that the recordkeepers are handling the matter properly, or assume that it is not an issue of concern for plan sponsors. Those are dangerous assumptions.
Source: Drinker Biddle & Reath LLP, August 2010.
ERISA Revenue-Sharing Litigation Update - Summary: Over the past two years, numerous putative class actions have been filed challenging alleged revenue-sharing practices in connection with 401k plans and other types of pension plans. This is a summary of the decisions and a brief update on the current state of the litigation.
Source: Sutherland Asbill & Brennan LLP 
, October 2008.
Companies Move to Ward Off Fee Suits - Summary: Defined-contribution plan executives are beefing up disclosure to participants about plan fees well ahead of regulatory guidance expected by the end of the year.
Source: Workforce.com (free registration may be required), July 2007.
Revenue Sharing and Indirect Payments - Summary: The rule is that fiduciaries have to know about money or any other thing of value that is being paid indirectly to any plan provider or service provider—-if a payment relates to the plan or to any plan transactions.
Source: Drinker Biddle & Reath LLP, June 2007.
Uncovering and Understanding Hidden Fees in Qualified Retirement Plans - Summary: In the United States, the level of concern over 401k fees is steadily increasing. However, very few employers understand the nature and scope of the retirement plan industry's business model. Not even the Federal Government fully grasps the issue. Understanding how hidden fees came about, and recognizing the specific types and amounts of such fees, will help employers make better decisions regarding 401k services.
Source: 401khelpcenter.com , February 2007.
Uncovering Hidden 401k Fees - Summary: As a plan decision-makers, you can have a significant impact on the cost of your plan. You can lower the plan's overall expense structure by shopping around, being an informed buyer, and favoring high-quality, lower-cost investment vehicles. Here are some question you should consider asking any current or future plan service provider.
Source: 401khelpcenter.com, July 2004.
For more information on plan fees and costs, go to our COLLECTED WISDOM™ on Plan Fees and Expenses.
To find more information fiduciary liability, go to our COLLECTED WISDOM™ on Fiduciary Responsibility and Liability Issues.
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