DC Fiduciaries Must Follow Plan Document Expense Allocation Rules

>If plan documents don’t clearly state a policy on the matter, the DoL’s Employee Benefits Security Administration (EBSA) said plan sponsors and fiduciaries have “considerable discretion” in handling expenses.

“A plan fiduciary must be prudent in the selection of the method of allocation,” the EBSA wrote in  Field Assistance Bulletin (FAB) 2003-03. ” Prudence in such instances would, at a minimum, require a process by which the fiduciary weighs the competing interests of various classes of the plan’s participants and the effects of various allocation methods on those interests. In addition to a deliberative process, a fiduciary’s decision must satisfy the “solely in the interest of participants” standard.” The DoL document is available at http://www.dol.gov/ebsa/regs/fab_2003-3.html .

These general principles apply to methods of allocating expenses among participants in the plan as a whole and allocating specific expenses to individual participants, rather than the plan as a whole, the EBSA said.  The FAB is part of the department’s ongoing compliance assistance program to help employers, plan officials, service providers, and others comply with ERISA.