Everything 401(k) Plan Sponsors Need to Know About Fees

What do 401(k) plan sponsors need to know?

What do 401(k) plan sponsors need to know?

Well, this is certainly worth a look. Vanguard is out with a new whitepaper for 401(k) plan sponsors on determining the reasonableness of fees.

The investment behemoth notes that fees paid for retirement plan investments and services have always been an important consideration for ERISA fiduciaries. However, in recent years these fees have come under increased scrutiny because of litigation, Department of Labor (DOL) regulations, and congressional hearings.

“Under section 408(b)(2) of ERISA, covered service providers are required to identify all plan services and disclose all direct and indirect compensation received in connection with the plan,” the paper explains. “While plan sponsors undoubtedly benefit from receiving more comprehensive and more uniform disclosures, many sponsors wonder what it all means for them. Specifically, they ask what they should do with the fee information once they have it. Most plan sponsors understand they have a fiduciary duty to ensure that plan fees are reasonable, but they repeatedly ask how to determine

”Despite all the recent attention on fees, the requirement to ensure the reasonableness of plan fees is nothing new,” it adds. “As a result, over the years plan sponsors and service providers have developed widely recognized tools and methodologies for analyzing plan fees.

“These range from the most used (periodic reviews of fee disclosure reports) to the most comprehensive and costly (requests for proposal, or RFPs). There is no one-size-fits-all approach, and each of the tools and methodologies has pros and cons that should be considered depending upon a plan’s unique facts and circumstances.”

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