A recent survey of 250 nonprofit plan sponsors by the Plan Sponsor Council of America (PSCA) revealed that many sponsors are unaware of the how their plans are structured with respect to fees, which could leave them open to fiduciary liability.
The key findings of the survey are as follows:
- One-third of respondents are unsure if their plan uses contract fees (revenue sharing) to pay administrative expenses, including 50% of small plans.
- One-fourth of plans reallocate revenue sharing among all participants while one-fourth of respondents are unsure.
- The majority of plan sponsors that use an advisor, use an advisor that acts as a co-fiduciary.
- Approximately one-fourth of respondents are not aware of formal fee policy statements.
- A significant number (14%) of small plans were unsure of their ERISA status.
403(b) plan sponsors should understand their plans and how advisors and record keepers are compensated from plan assets. Sponsors that do not have an advisor to help them understand this information are encouraged to seek out such professionals. The Department of Labor expects plan sponsors to understand the fees that their plan pays from assets, and such an understanding will be the first line of defense in case of an excessive fee law suit.
The survey summary can be found at the link below. Additional information on fiduciary responsibility will be available at the September 11 seminar described above.
For questions or more information, please contact Richard Green at email@example.com or 844.4WINDES.