Dana M. Muir

Abstract

This article presents a discussion of the use of revenue sharing by mutual funds and 401(k) plan service providers. The author engages in a historical exploration of how revenue sharing has been used in 401(k) plans and highlights regulators’ increasing interest in ensuring disclosure of fund monies diverted for revenue-sharing purposes. In addition, the article discusses how the current federal regulatory framework for employee benefits has not adapted to the increased use of 401(k) plans. The author challenges the way ERISA places the burden of monitoring compensation to service providers on the employers who make the 401(k) plan available to their employees and instead proposes several alternative frameworks that would decrease employer responsibility and liability for investment selection.

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