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ARTICLE · 17 MAY 2012

New US Retirement Plan Fee Disclosure Rules

Latham & Watkins
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New rules require disclosures about fees under US tax-qualified retirement plans by both service providers to plans and plan sponsors.

United StatesEmployment and HR
Robin Struve
Robin Struve
Sandhya Chandrasekhar
Sandhya Chandrasekhar

New rules require disclosures about fees under US tax-qualified retirement plans by both service providers to plans and plan sponsors.

US tax-qualified plans may only pay "reasonable compensation" for services. If the plan pays more than reasonable compensation, there may be a "prohibited transaction" creating fiduciary liability and resulting in excise taxes. Accordingly, plans must be able to determine what services they are purchasing and the fees being paid for those services. However, many plans receive service under "bundled" arrangements, in which services and fees are not specified. For example, a mutual fund company and its affiliates may provide investment services, recordkeeping and trustee services for one fee.

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