Revenue Sharing Agreement Mutual Funds

In this model, the entire revenue participation is passed on to plan service providers through the fund. The investment manager receives the investment management tax as direct compensation. Revenue sharing for royalty-based plansA recordkeeper has the option of charging revenue-sharing fees to the plan. Often this is done by creating a receiver account (known as the ERISA budget account) within the plan. This account collects all revenue-sharing payments and then uses them to offset the costs of planning services such as registration, administration and consulting or consulting work. This model benefits from directors based on: Revenue Sharing for Commission-Based PlansIn the employer-sponsored pension sector, all components of the gross cost ratio, with the exception of investment management fees, are generally classified as revenue sharing. The following graph describes the general revenue allocation agreements for Commission-based plans. If so, what guidelines should DOL publish with respect to the obligations of sponsors, directors and other agents with respect to the allocation of revenue-sharing payments that the plan receives from the service provider? The dol guidelines for revenue allocation should be coordinated with the IRS to avoid conflicting directions. There is no doubt that, in many cases, suppliers would replenish excess revenue-sharing quantities in plans – if the directors reviewed and negotiated this recovery. A reasonable interpretation of the prudent man rule is that directors must act on behalf of the participants to obtain that “free money” for the plan.

An alternative for administrators of “excess” revenue-sharing plans is to move to a class of investment fund shares with a lower effort ratio, thereby reducing the amount of revenue participation and expenses borne by members. The U.S. Department of Labor (“DOL”) has issued some notices on the distribution of revenues. Since 1997, DOL has argued that directors have an obligation to ensure that the amount and source of all the borrower`s remuneration, regardless of their origin, including revenue-sharing payments. DOL Advisory Opinion 1997-16A.

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