Plan fiduciaries should now be aware of the recent regulations mandating fiduciary responsibility to evaluate the reasonableness of fees charged to plans and participants and their duty to inform participants of these fees. These new reporting requirements eliminate the uncertainty participants may have regarding plan fees and reinforce the knowledge that participants are in fact being charged fees. As the American workforce is pressed to take on more responsibility for evaluating and controlling their own financial retirement health, an understanding of these fees is important for evaluating their investment strategies.
So how do fiduciaries evaluate “reasonableness?” Plan fiduciaries should compare their fees to other plans with a similar number of participants, amount of assets, and investment mix. Selecting an appropriate benchmark is important so that judgment is not skewed. Larger plans with greater assets will have more leverage to negotiate fees with their investment companies than smaller plans. As plan assets grow, the appropriate benchmark changes and plan sponsors should take the time to reevaluate fees.
Have your plan fees recently been evaluated for reasonableness?