The Reasonableness of 401(K) Plan Fees

Abstract

This paper analyzes the reasonableness standard applicable to 401(k) plan service fees under ERISA and examines the DOL’s recent regulatory initiatives and court decisions interpreting the reasonableness of such fees. It first describes how 401(k) plans operate and what service arrangements and fee structures are common in the marketplace. It then analyzes how 401(k) plan fees are regulated within ERISA’s framework of fiduciary duties and how DOL rulemakings will affect the reasonableness of fees. Finally, it offers some observations on how the reasonableness of 401(k) plan fees might be ensured in the future.

Keywords: Reasonableness, Reasonable, 401(k), Retirement Plan, DOL, Fiduciary, Service Provider, Fees, Fiduciary, Compensation, Litigation, Prohibited Transaction