--- title: Reasonableness Requirement Is Not New description: Reasonableness Requirement Is Not New image: https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_pp_png_category.png --- [![logo](https://www.dwc401k.com/hubfs/_global/logo.svg "logo")](https://www.dwc401k.com/) [![logo](https://www.dwc401k.com/hubfs/Dwc-2019/SVG/logo.svg "logo")](https://www.dwc401k.com/) [![Contribution Limits](https://no-cache.hubspot.com/cta/default/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4) [![Log in](https://no-cache.hubspot.com/cta/default/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc) [![services-icon1](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon1.png) ## Plan Document A properly drafted document is the foundation of achieving the company's objectives and keeping the plan in operational compliance. ](https://www.dwc401k.com/services/plan-document) [![services-icon2](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon2.png) ## Plan Compliance We have a fundamental understanding of how critical plan compliance is to both the IRS and Department of Labor. ](https://www.dwc401k.com/services/plan-compliance) [![services-icon3](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon3.svg) ## Defined Benefits Services We work with business owners and investment advisors to determine what makes the most sense by providing a detailed cost benefit analysis. ](https://www.dwc401k.com/services/defined-benefits-services) [![services-icon4](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon4.svg) ## Mergers, Aquisitions & Related Company Analysis The DWC team is well-versed enough in the nuances and is ready to help you navigate the situation. ](https://www.dwc401k.com/services/mergers-acquisitions-analysis) [![services-icon5](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon5.png) ## Plan Corrections DWC's extensive experience with both the IRS and Department of Labor voluntary correction programs allows us to help you address just about any accident that might happen. ](https://www.dwc401k.com/plan-corrections) [![services-icon6](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon6.png) ## Government Audits Being selected for an audit can feel overwhelming, but the process doesn't have to be. ](https://www.dwc401k.com/services/government-audits) ![service-right-icon](https://www.dwc401k.com/hubfs/QOTW/March%202020/service-right-icon.svg) ## Investment Advisor Support DWC has a long history of successfully partnering with investment advisors. 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Is Finally… Simple](https://www.dwc401k.com/blog/why-the-simple-to-401k-transition-is-finally-simple) [![https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg](https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg) ](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-6) ### [Decoding the Alphabet Soup: What’s With All the Acronyms | Part 6](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-6) [![https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg](https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg) ](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-5) ### [Decoding the Alphabet Soup: What’s With All the Acronyms | Part 5](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-5) [![https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg](https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg) ](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-4) ### [Decoding the Alphabet Soup: What’s With All the Acronyms | Part 4](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-4) [![https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_rr_png_category.png](https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_rr_png_category.png) 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Pozek ](https://www.dwc401k.com/blog/author/adam-c-pozek) | Published: 02/24/2011 | [Fiduciary Responsibility](https://www.dwc401k.com/blog/topic/fiduciary-responsibility), [Plan Fees and Expenses](https://www.dwc401k.com/blog/topic/fees), [Pension Primer](https://www.dwc401k.com/blog/topic/pension-primer) An article appeared yesterday on CFO.com entitled [“New 401(k) Obligations Heaped on CFOs”](http://www.cfo.com/article.cfm/14557576/c_14557494) and it carried a tagline stating “New disclosure rules abound, but pay close attention or you could be sued by plan participants.” The article goes on to describe that, among other things, plan fiduciaries have a duty to “pay only reasonable plan expenses.”  While this is certainly correct, it is not a new requirement. For many years, the law has imposed a duty on plan fiduciaries to ensure that any fees paid by the plan are reasonable in light of the services provided.  Just as this rule is not new, the specter of participant-driven litigation is not new either.  There have been plenty of excessive fee cases in the past few years to prove it.  However, in addition to the litigation risk associated with unreasonable fees, they can also result in Prohibited Transactions subject to DOL/IRS sanctions. The challenge has been that while fiduciaries have been required to know and understand the fees (both pre-requisites for determining reasonableness), service-providers have not been required to provide that information.  As a result, even the most knowledgeable and diligent fiduciaries could face significant roadblocks to satisfying their obligations.  The Department of Labor’s new [fee disclosure regulations](http://www.reish.com/publications/pdf/DOLfinalfeedisc408(b)(2).pdf) change that. Originically slated to take effect this summer, the DOL recently annouced the postponement of the effective date until January 1, 2012. The regulations are far too detailed to cover here, but the gist is that in order for fees to be considered reasonable, the service-provider who will receive those fees from the plan must disclose them to fiduciaries in advance.  Obviously, the amount of the fees must be in line based on the services provided, but fees that are otherwise reasonable in amount are deemed unreasonable in the absence of proper disclosure.  A plan fiduciary that allows a plan to pay fees in the absence of the requisite disclosure commits a Prohibited Transaction. While the new fee disclosure regulations are certainly drawing much attention, it is important for fiduciaries to understand that the reaonsableness requirement is not new.  If there is concern that a plan has paid or is paying excessive fees, don't wait until 2012 to start asking questions. - Share - [**](https://www.facebook.com/sharer/sharer.php?u=https://www.dwc401k.com/blog/2011/02/24/reasonableness-requirement-is-not-new&title=Reasonableness%20Requirement%20Is%20Not%20New&picture=https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_pp_png_category.png&description=Reasonableness%20Requirement%20Is%20Not%20New) - [**](https://twitter.com/share?url=https://www.dwc401k.com/blog/2011/02/24/reasonableness-requirement-is-not-new&hashtags=) ## Browse categories [ DWC Developments ](https://www.dwc401k.com/blog/topic/dwc-developments) [ Industry Insights ](https://www.dwc401k.com/blog/topic/industry-insights) [ Regulatory Round-Up ](https://www.dwc401k.com/blog/topic/regulatory-round-up) [ Cash Balance Corner ](https://www.dwc401k.com/blog/topic/cash-balance-corner) [ 401(k) Q&A ](https://www.dwc401k.com/blog/topic/401k-qa) [ Operational Overview ](https://www.dwc401k.com/blog/topic/operational-overview) [ Lessons from Litigation ](https://www.dwc401k.com/blog/topic/lessons-from-litigation) [ Pension Primer ](https://www.dwc401k.com/blog/topic/pension-primer) [ Browse by Topic ](https://www.dwc401k.com/knowledge-center-topics) ## Subscribe to our newsletter ### Only the Best Retirement Industry Content Get our 401(k) and defined benefits content delivered directly to your inbox. 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