On September 20th, Fred Reish will be giving testimony on revenue sharing before the DOL’s Advisory Council on Employee Welfare and Pension Benefit Plans. More specifically, the testimony will be given to the Working Group on Fiduciary Responsibilities Update and Revenue Sharing.

Fred’s comments will focus specifically on revenue sharing practices related to 401(k) plans. Within that context, the Working Group has developed the following outline of its priorities and areas of interest:

The Working Group recognizes that revenue sharing is becoming an emerging, if not a common practice used to offset plan expenses with respect to DC plans. Increasingly, and with greater disclosure being provided to participants on costs and revenue sharing crediting, sponsors are questioning how to allocate expense offset payments received by the plan. The Working Group will seek to evaluate the following issues:

  • whether the DOL should issue guidance with respect to the acceptable and proper use of plan revenues generated by revenue-sharing arrangements and in appropriate circumstances where there is excess revenue-sharing (i.e., revenue-sharing that exceeds recordkeeping/administration fees), how such excess revenue-sharing be allocated to participants?
  • survey current practices to determine the manner in which plan sponsor/fiduciaries currently ensure understanding of revenue-sharing/fee arrangements.
  • determining what guidance the DOL should issue with respect to charging/debiting a participant's account and the crediting of participant accounts under specific circumstances.
  • what a plan sponsor/fiduciary needs to know and a plan provider should be required to provide, when they enter into a revenue-sharing or rebate arrangement.

Fred will submit written comments prior to the hearing. Copies of those comments will be included with a future newsletter.

Source: The Adviser Report