May 24, 2012
--- A Government Accountability Office (GAO) review of
retirement plan documents showed some sponsors face challenges in understanding
the fees they and their participants are charged. ---
The GAO recommends the Department of
Labor (DOL) develop and implement more proactive approaches to sponsor
educational outreach, improve public access to annual Form 5500 data and
examine the definition of a fiduciary to determine if it captures the current
relationship between sponsors and providers.
According to a GAO report, some
sponsors the agency surveyed did not know if their providers used complex fee
arrangements, such as revenue sharing, or if their plans paid certain fees
under an insurance contract, such as a group annuity contract. In addition,
some sponsors reported knowing about arrangements, but did not fully understand
how these fees were charged. For example, one relatively large plan
underestimated recordkeeping fees by more than $58,000, because the sponsor did
not include the fees charged to participants’ accounts under its revenue
noted that the DOL has taken several actions to help sponsors understand and
monitor fees charged by service providers. For example, it disseminates a
number of publications and resources, including a 401(k) fees checklist that is
available to sponsors on its website to help them better understand plan fees.
However, according to GAO’s survey results, more than an estimated 90% of
sponsors either did not know about or have not used Labor’s resources to
compare and assess plan fees.