The paper, “Financing Your 401(k) Plan,” is meant to assist plan fiduciaries in understanding the impact that a plan’s financing strategy can have on the fees paid by an individual participant.
The paper illustrates how fees collected for plan administration can vary dramatically between participants in a plan when fees are either directly charged based on an individual participant’s account balance or whenever revenue sharing is utilized. The individual participant fees in most plans that utilize revenue sharing are significantly impacted by the participant’s investment allocation, creating what Gosselin Consulting Group would consider a clear conflict of interest.
The paper asserts that plan sponsors could potentially face additional fiduciary liability as a result of inequitable distribution of participant administration fees if one applies the concepts embedded in Regulation 408(b)(2) and ERISA fiduciary standards to the individual participant level.
The report is available at http://gosselinconsultinggroup.com/wp-content/uploads/2011/10/GCG_Financing_Your_401k_Plan.pdf.