A plan may deduct fees from a participant’s defined contribution plan account. Plan administration fees and investment fees can be deducted from the account either as a direct charge or indirectly as a reduction of the account’s investment returns. Fees for individual services, such as for processing a loan from the plan or a Qualified Domestic Relations Order, also may be charged to the account.
Plan fiduciaries have a specific obligation to evaluate the fees and expenses paid by a plan for its operations. Fiduciaries must establish a prudent process for:
- selecting plan investment alternatives and plan service providers;
- ensuring that fees paid to service providers and other plan expenses are reasonable in light of the level and quality of services provided;
- selecting investment alternatives that are prudent and adequately diversified; and
- monitoring investment alternatives and service providers once selected to see that they continue to be appropriate choices.