Under Internal Revenue Code section 404(c), which came out of ERISA, each plan sponsor has fiduciary responsibilities to protect the interests of the participants. Among these responsibilities is an obligation to ensure that fees charged to participants’ accounts are reasonable. This includes fees charged by investment managers, auditors, attorneys, advisors, and others.

Recently, several high-profile lawsuits have been filed against sponsors, alleging that these companies allowed unreasonable fees to be charged by investment managers.

A second but related issue involves advisors who recommended certain investment managers and then benefited from revenue sharing arrangements with those investment managers.

The sponsors’ fiduciary obligations to the participants require that the sponsors have the participants’ best interests in mind.