Advisory Opinion on Special Revenue Sharing and Expense Accounts

Advisory Opinion 2013-03A addresses a process adopted by many institutional recordkeepers of depositing revenue sharing into an account separate from plan funds controlled by the recordkeeper and from which the plan may specify that certain expenses are to be paid.

Document Excerpt

Due to the inherently factual nature of the inquiry, it is possible that revenue sharing amounts received by Principal in connection with a particular plan’s investments are assets of the plan, depending on Principal’s arrangements and communications with that plan.(3) Nothing in the circumstances described above, however, would lead us to conclude that amounts recorded in the bookkeeping account as representing revenue sharing payments are assets of a client plan before the plan actually receives them. As noted above, however, the assets of a plan may include any type of property, tangible or intangible. Thus, the client plan’s contractual right to receive the amounts agreed to with Principal, or to have them applied to plan expenses, would be an asset of the plan. Similarly, if Principal should fail to pay amounts as required by the contract or arrangement with the plan, the plan would have a claim against Principal for the amount owed and the claim itself would be an asset of the plan.(4)


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