I have commented before, including here, on the fact that there is some inherent tension between the fact that the administration of 401(k) plans costs something and the obligation of sponsors to, nonetheless, keep those costs down. One of the hoped for goals of the Department of Labor’s effort to shed light on fees, expenses, costs and revenue sharing is to make sure that plan sponsors and fiduciaries have an accurate understanding of the expenses paid to run their plans, with the implicit assumption that they will then act on that knowledge (which they will, if they don’t want to end up a defendant in a future excessive fee/costs claim, likely filed as a class action in many cases).
Ary Rosenbaum does a beautiful job in this piece here of explaining the costs of administration, where they are buried, the belief of some – particularly smaller – plan sponsors that they are not paying for plan administration, and the impact on this system that the new disclosure regulations are likely to have. Ary writes regularly on 401(k) management issues, most of which I read, and I think this is his best piece yet. I highly recommend it, particularly for anyone looking for a nice, short yet comprehensive, introduction to the subject (it also has great pictures, if you like alligators).