SEC registration and sub T/A fees

[Guest xplan]

Does anyone know of any SEC requirement that a TPA/Recordkeeping firm register with them as a "Transfer Agent" in order to receive sub ta fees from mutual fund companies? In addition, if they are required to do so, is there an annual disclosure filing to the SEC?

[Guest]

To my knowledge, there is no SEC requirement that a TPA register as a Transfer Agent in order to receive sub-TA fees from the mutual fund companies. The mutual fund company will typically have a standard agreement that the TPA and the Plan Sponsor can sign indicating that the TPA may receive sub-TA fees from them.

I recommend to my clients that any sub-TA fees they receive from the mutual funds should be disclosed to the Plan Sponsor and used to offset plan expenses. You can also spread the sub-TAs as a "fee credit" to the participant's accounts.

[Guest xplan]

Thank you Carol. I am also under the belief that Plan Sponsors should be made aware of any revenue sharing agreements, since they impact the expense ratios of their investments. However, this TPA firm does NOT disclose OR offset receipt of any sub TA's. Instead they are receiving a sub ta from the mutual fund company to keep recordkeep individual accounts and also is charging the Plan a $30 per head fee. I believe that this is excessive, but because the Plan Sponsor is not being made aware of the sub TA fees the TPA is receiving, I believe is unethical, given the state of mind the DOL is in lately, regarding plan fees. I am helping the fiduciary of the Plan (Plan Administrator) complete due diligence on a TPA/recordkeeper, so any help would be appreciated.

Sorry for being longwinded, but do know who needs to register with the SEC using Form TA-1?

Thank you for any help you can provide.

[Guest]

Now that I think of it, I believe on one of the schedules for the 5500 we had to reveal any fees paid by the plan plus any "fee credits". You might want to look at the DOL Opinon letters for Frost Bank and Aetna which address the offset and disclosure issues. Look at DOL Advisory Opinion 97-15A and 97-16A.

As far as charging the per head charge, I think that is reasonable and the sub-TA fees that they receive from the mutual fund company would be used to offset those fees. The TPA should charge the reasonable fees that they need for the services they provide to their clients. However, if they are then receiving any revenue sharing from the mutual funds to help offset those costs, then I think it needs to be disclosed.