According to Mercer, a large international human resources consulting firm, there are 10 steps plan sponsors should take in 2014 to keep their 401(k) plans leading edge and market competitive. From Mercer’s top ten, here are the five I believe are most important:
Say goodbye to revenue sharing. There are a number of potential problems if some plan participants experience higher relative investment fees in the plan because they choose funds that pay revenue sharing. First, there may be fiduciary risk for the employer from not offering the lowest cost share class of a particular investment option. There is also a lack of fee transparency when participants choose these options since they may not be aware that the cost of an option is higher due to the revenue sharing it pays. Finally, if participants investing in higher cost options do not benefit from the revenue sharing, there could be the potential for litigation.
