No ERISA provision sets a benchmarking interval. The standard is review at reasonable intervals, which means your committee picks a cadence, follows it, and writes down what it found.
The three-to-five-year figure that circulates as a rule is not one. It comes from a Department of Labor cost estimate describing how often sponsors already shop, not from guidance on how often they should.
Checking your fees once does not settle whether they are still reasonable. The Supreme Court made that explicit in Tibble v. Edison.
A workable pattern is an annual check using disclosures you already receive, plus a fuller market comparison on a longer cycle the committee sets in advance.
Four events should pull a review forward regardless of the calendar: crossing a share class minimum, a recordkeeper acquisition or repricing, a change to the lineup, and a material shift in participant count.
A review that ends in no changes is a good outcome, as long as the comparison and the reasoning were recorded.
Why This Matters
Ask how often a committee should benchmark its fees and you will hear a specific interval. Annually. Every three years. Every three to five years. Each of those is a reasonable answer, and any of them can support a defensible process.
What surprises most committees is that none of them comes from a rule. Federal law sets no benchmarking schedule for retirement plan fees, which is why the answers differ.
The standard is that the review happen at reasonable intervals, and reasonable is left to the committee and the people advising it.
That makes the cadence a decision your committee owns. The difficulty comes when the interval was never actually chosen. There is nothing to follow, and no record showing what was reviewed and when.
Our Fee Benchmarking Cadence Worksheet gives your committee a place to record the interval it chose, the reasoning behind it, and the date of the last review.
Featured Worksheet
Fee Benchmarking Cadence Worksheet
A record of the fee review schedule your committee set, the events that move a review up, and what each review compared and decided. Use once to set the cadence, then once per review.
Under ERISA, your committee is held to what a professional familiar with retirement plans would do, not to what seems reasonable to someone learning as they go. For fees, that means paying no more than a reasonable amount for what the plan needs, and checking on a regular basis.
The Department of Labor’s guidance answers the timing question this way: review your service providers at reasonable intervals, thoroughly enough to confirm they are doing what the plan needs and what the law requires.
Reasonable intervals. Not quarterly, not annually, not every three years. The interval is a judgment your committee makes and has to be able to defend.
The same reasonable-intervals standard governs the investment lineup, but the lineup can be reviewed more often than fees can, since a fund review uses reports you already receive while a fee comparison needs outside data.
Where the Three-to-Five-Year Number Came From?
This one is worth knowing, because it explains where the most-repeated number comes from.
In 2010, the Department of Labor published its fee disclosure rule under ERISA section 408(b)(2). In the cost analysis is this sentence: the Department assumes that changes in plan disclosures will occur at least once every three years, because plans normally conduct requests for proposal from service providers at least once every three to five years.
In other words, the Department was doing math, not giving advice. It needed a number for how often disclosures get updated, so it used how often plans already go to market.
The same release makes the point sharper elsewhere. In the section explaining why the rule was needed at all, the Department observes that even very large, relatively sophisticated plan sponsors shop for services only periodically, generally once every three to five years, and treats that infrequency as one reason vendors hold an information advantage over the sponsors who hire them.
The figure shows up three times in that release, and not once as a suggestion. Twice it is a number used in a calculation, and once it is the Department pointing out that shopping infrequently is what leaves sponsors at a disadvantage.
Why Reviewing Fees Once Is Not Enough
Checking your fees once does not settle whether they are still reasonable. That is the part committees underestimate, and the Supreme Court made it explicit in 2015.
In Tibble v. Edison International, a plan had kept expensive versions of several mutual funds in its lineup when cheaper versions of those same funds were available to a plan its size. The participants sued. The plan’s response was that the funds had been chosen years earlier and the choice was too old to challenge now.
The Court disagreed, unanimously. The committee was not being judged on picking those funds. It was being judged on leaving them there, and every year they stayed was a year the committee could have compared and did not.
So the question your committee has to be able to answer is not whether the lineup and the fees were reasonable when they were set. It is whether anyone has checked since, and how recently.
Fee review is really two different exercises on two different schedules.
The annual check.
This one uses what you already receive, so it costs nothing but a meeting.
Pull the fee disclosures your covered service providers send and the report showing what your recordkeeper charged.
Confirm the total the plan paid this year.
Compare it against last year and note anything that moved.
It produces the record showing the committee was paying attention in the years between larger reviews.
The market comparison.
This one tests what the plan pays against what the same services cost elsewhere. It's also the review the industry conventions are describing when they name an interval.
Decide how often you will run it. Every three years, every five, or another schedule is your call.
Write the interval in the minutes so the committee has something to follow.
Hold to it. A committee that set a five-year cycle and followed it is in better shape than one that set three years and skipped the third.
What Should Move a Review Up
Four events change whether your fees are still reasonable, and any of them should pull a review forward regardless of where you are in the cycle.
Plan assets cross a share class minimum. Funds are sold in share classes that hold identical investments at different prices, and a growing plan can become eligible for a cheaper class of a fund it already owns. Nothing about this is automatic, so ask your recordkeeper in writing which classes the plan qualifies for today and what it would take to reach the next one. Put the answer in the file.
Your recordkeeper is acquired or changes its pricing. Either one resets the terms you originally evaluated.
A fund is added, dropped, or repriced. Any of the three moves the plan’s blended cost, and a repricing does it without anyone touching the lineup.
Participant count or assets shift materially. Per-participant and asset-based pricing both respond to size, so a plan that grew or lost a large group is not priced the way it was when the contract was signed.
What to Look At When You Review
Most fee reports give you one number: what the plan pays in total. It is worth knowing, but it is an average, and an average can look fine while individual funds sit in the wrong place. So when you run the review, look at the lineup fund by fund and ask three questions.
What is each fund’s net expense ratio?
Is each fund in the cheapest version the plan qualifies for?
Where does the revenue sharing the lineup generates end up?
Answering these does not require a paid fee survey. The fund’s prospectus lists what every version costs, and your participant disclosure shows what each fund returned against its benchmark. The worksheet below has a row per fund for all three.
Where This Leaves You
Decide the interval and write it down. That single act converts the question from something the committee has an opinion about into something the committee has a process for.
Then run the annual check even in years when nothing seems to be changing, because a quiet year still has to be accounted for if someone asks about it later. If the comparison comes back showing your fees are reasonable and the committee changes nothing, that is a successful review. What it needs is the comparison, the reasoning, and the date.
Our Fee Benchmarking Cadence Worksheet records the interval your committee set, the trigger events that would move a review up, and a page per review for what was compared and what was decided. If you would like to walk through your plan’s current fee review process, click here or call us at (206) 625-1800.
Featured Worksheet
Fee Benchmarking Cadence Worksheet
A record of the fee review schedule your committee set, the events that move a review up, and what each review compared and decided. Use once to set the cadence, then once per review.
No. ERISA requires prudence, and the Department of Labor’s guidance calls for reviewing service providers at reasonable intervals. No provision names a frequency. An annual check is a common way to meet the standard, not the standard itself.
Yes, and those reviews are often the most useful ones to have on file. The record shows the committee compared, considered, and reached a conclusion. A committee that reviewed carefully and changed nothing is in a stronger position than one that made a change it can no longer explain.
ERISA requires plan records to be kept available for examination for at least six years, so a fee review file holding only the current year is short. Keep each review’s comparison, decision, and date for the full period, since the value of the record is that it shows a pattern over time rather than a single snapshot.
Either can do the analysis, and many committees rely on their advisor to assemble the comparison. The committee still owns the decision, which means evaluating what it receives rather than accepting it. The record should show the committee considered the information and reached its own conclusion.
29 U.S. Code § 1104, Fiduciary duties, at law.cornell.edu/uscode/text/29/1104
29 U.S. Code § 1027, Retention of records, at law.cornell.edu/uscode/text/29/1027
29 CFR § 2509.75-8, Interpretive Bulletin 75-8, FR-17, at law.cornell.edu/cfr/text/29/2509.75-8
Tibble v. Edison International, 575 U.S. 523 (2015)
Reasonable Contract or Arrangement Under Section 408(b)(2), Fee Disclosure, 75 Fed. Reg. 41600 (July 16, 2010), at federalregister.gov
29 CFR § 2550.408b-2, at law.cornell.edu/cfr/text/29/2550.408b-2
DOL Advisory Opinion / Information Letter, December 1, 1997, at dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/information-letters/12-01-1997
Important Disclosures
First Hill Trust Company is a Washington State-chartered trust company. Investment advisory services are provided by BAC Capital Advisors, an SEC-registered investment adviser and a wholly owned subsidiary of First Hill Trust Company. Registration does not imply a certain level of skill or training. This article is educational. Neither First Hill Trust Company nor BAC Capital Advisors is acting as ERISA counsel or tax counsel to any plan or plan sponsor, and nothing here replaces advice from qualified counsel about your own plan.
Accuracy and currency of information. The statutory provisions and regulatory descriptions in this article were verified against the cited primary sources as of the date of publication. Regulations and guidance change. Readers should confirm current requirements with qualified counsel.
Educational purpose only. Provided by First Hill Trust Company for general informational and educational purposes only. It is not legal, tax, accounting, investment, or fiduciary advice, does not constitute a recommendation regarding any plan, investment, strategy, or course of action, and does not consider any recipient’s specific circumstances. Consult your own qualified advisors before acting.
No offer, agreement, or commitment. Nothing in this material constitutes an offer, solicitation, agreement, or commitment to provide any particular service or to assume any particular responsibility. Descriptions of what a trustee, administrator, adviser, committee, employer, or other party “may” or “can” do are illustrative of how such arrangements commonly work and do not describe the terms of any specific engagement. The actual services provided, the allocation of responsibilities, the scope of any delegation, and the duties of any party are governed solely by the applicable plan documents, trust agreement, advisory agreement, and written service agreements. In the event of any inconsistency, those documents control.
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Statutory and regulatory references. References to ERISA, the Internal Revenue Code, and related statutory or regulatory provisions are general summaries only. They are not a substitute for review of the actual statutory text, regulations, or guidance from the Department of Labor, Internal Revenue Service, or other relevant authorities, and they do not address how those provisions may apply to any particular plan, sponsor, fiduciary, or individual. Laws, regulations, and guidance are subject to change and to interpretation by the relevant agencies and courts. Examples, categories, and situations described are simplified for illustration and may not reflect the requirements or circumstances of any particular plan or person.
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