1. F AQ: FEE REASONABLENESS 1
What standard applies when determining whether retirement plan fees are appropriate?
Under the Employee Retirement Income Security Act of 1974 (ERISA), retirement plan fiduciaries must
ensure that fees paid from the plan are reasonable in light of the services being rendered. Attaining fee
reasonableness does not require choosing the service provider with the lowest fee service proposal.
How can a plan fiduciary prove the reasonableness of plan fees?
While the recipe for meeting the reasonableness standard is not expressly finite, demonstrating certain
highly encouraged best practices has been known to satisfy Department of Labor inquiries on the
topic.
• Plan sponsors should dissect and thoroughly understand the fees paid from plan assets.
• A fee policy statement exhaustively listing plan fees and describing how they are paid is highly
useful.
• Plan sponsors should be able to confidently assert that they have thoroughly reviewed annual
fee disclosures from vendors receiving a certain level or type of compensation paid from plan
assets.
• Conducting an annual recordkeeping fee benchmarking study allows for meaningful
comparison of current plan fees to a range of fees that would be expected if the plan’s
recordkeeping services contract went out to bid in the marketplace. Apparent opportunities to
negotiate fees downward should be taken.
• A recordkeeping vendor request for proposal process every 5 years or so can also help satisfy
the reasonableness standard, as well as a related fiduciary duty to monitor all plan services
providers.
1
Information contained herein is provided “as is” for general informational purposes only and is not intended to be
completely comprehensive regarding the particular subject matter. While Multnomah Group takes pride in providing
accurate and up to date information, we do not represent, guarantee, or provide any warranties (express or implied)
regarding the completeness, accuracy, or currency of information or its suitability for any particular purpose. Receipt of
information herein does not create an adviser-client relationship between Multnomah Group and you, and we have not
assessed the suitability or potential value of any particular investment. Neither Multnomah Group nor any of our advisory
affiliates provide tax or legal advice or opinions. You should consult with your own tax or legal adviser for advice about
your specific situation.

2. Should a plan sponsor always offer the lowest cost available share class mutual funds?
Mutual funds are often offered in a hierarchy of share classes assigned according to factors such as
amount of assets invested in the fund. Sometimes, investing higher dollar amounts in a fund allows for
lower cost share class qualification. Plan fiduciaries must consider elements such as overall plan cost
and available revenue sharing before determining the appropriate share class. What is most important
for plan fiduciaries here and with regard to fee reasonableness determinations generally is the ability to
demonstrate a prudent (i.e. disciplined and diligent) process under which the issue was evaluated.
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