The Labor Department has made it clear that revenue-sharing allocation has to be done on a prudent and reasonable basis. Problem is, it left it at that.
And that leaves a lot of plan sponsors scratching their heads and wondering what is prudent and reasonable and what isn't. Charge a flat, per-head fee? Use a pro rata formula? Charge all participants the same expense ratio?
Revenue-sharing in defined contribution plans has “been fairly common for about 20 years, but the awareness of it has only been in the last five to 10 years or less,” said Fred Reish, an attorney with Drinker, Biddle & Reath in Los Angeles. “The law hasn't really caught up with that yet. So, there's no guidance for plan sponsors on how revenue-sharing should be allocated.”
Continue Reading for Free
Register and gain access to:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
