pooled plan - showing fees (or not) on participant statements

I've got a pooled plan where the plan sponsor doesn't want to show the investment fees separately from other gains/losses.  He says that it's net gains that matters - if the net is better than 'average', then the participants are fine.  He is fine with it showing on the SAR, and he is happy to tell his participants that the fees on the SAR are net against the total gains on their statement.

That isn't sitting well with me.  I'd think that in a pooled plan, the disclosure standard is even higher since all the assets are controlled by the trustee.  The fact that there are lawsuits about fees seems to indicate that disclosing fees so they can be monitored is the right thing to do.

So my question is, is there something in black and white that supports either side?  If it's a gray area, then that's fine, too, as long as I can present as such and tell the plan sponsor that this decision is on them.

Thanks.

The predominant investment offering in plans is a menu of funds where each participant is choose the investments for their account.  The fee disclosure rules are in the realm of the DOL in Labor Reg 2550.404a-5 and are applicable to plans that offer participant directed accounts.  These rules do not apply to a pooled plan where the investment decisions are outside the control of the participant.

One of the reasons allowing participants to choose their investments is the relief from some of the fiduciary responsibility for the choice of funds granted by the DOL regulations where plans make all of the disclosures about the various types of fees being paid from the plan.

The most compelling reason to give to the plan sponsor of a plan that has a pooled plan account is the fiduciary responsibility associated with managing the trust fund, including the requirement of prudence.  The plan fiduciary does not have the protections afforded by the DOL regs nor IRS 404(c).  An extended period of poor investment performance relative to the markets could invite participants to challenge the handling of the investment of their accounts, including the expenses charged to the trust.

Over the years, I have worked with several pooled plans where, frankly, the plans' investments demonstrably and significantly outperformed the markets.  The plan fiduciaries were willing to accept their responsibilities, kept to a routine of due diligence and prudence, and some with the assistance of outside advisers, achieved excellent results for the participants.

Your are correct - the decision is on them.

I never ever ever showed fees in a pooled environment. First of all, I don't trust what shows on the statements, second of all, it is inherently unfair (you could have a mutual fund that just shows net returns with no stated fees, vs. a managed account which nets out to the same fees but the fees are direct, or even the same mutual fund with different fee structures; that is, the same management fee baked in but the advisor fee could either be built in or charged separately). These issues are not unique to pooled plans, but at least there's no requirement to show them on the statements.