Investment Management Fees

[Guest DDDlump]

What are the implications of having investment management fees for self-directed brokerage account within 401k paid by the corporation, not from the assets of the plan? I.E. Owners and some employees self direct utilizing a money manager and other employees utilize mutual funds and the corporation not plan assets pay fees for individual money managers.

[Moe Howard]

There is no problem. What you describe is very common. The IRS allows the plan's sponsor (employer) to deduct the administrative fees that it pays for and on behalf of the trust.

If the sponsor wanted to, it could order the trust to pay the fees directly to the service provider by taking funds from each participant's account.

Neither is there any DOL requirement that fees for services provided to the trust cannot be paid by the plan's sponsor (employer).

[k man]

I agee that there is no problem with the employer paying fees directly. However, if the employer is paying directly the fees for directed brokerage but the other participants (invested in the core options) are paying asset based fees out of plan assets you might have a problem. it would seem to me that this is discriminatory.