A recent federal court case has emphasized the importance of regular monitoring of 401(k) and other defined contribution plan fees. Most 401(k) plans today utilize investment arrangements that produce asset-based fees that may be paid to record keepers, trustees, brokers, or other service providers. Recent Department of Labor (DOL) regulatory initiatives have been directed at providing both plan sponsors and plan participants with more information about asset-based fees. Asset-based fees are sometimes difficult to identify because they are netted out of plan investment performance. The use of multiple share classes with a single branded mutual fund further obscures the level of fees that might be assessed in the accounts of a plan. Because one of the stated responsibilities of plan fiduciaries is to act prudently to defray reasonable expenses of administering a plan, fiduciaries risk liability if unreasonable expenses are charged. In litigation that focused on whether it was prudent for plan fiduciaries to use “retail” share classes of several mutual funds rather than lower cost “institutional” share classes, the fiduciaries were found liable to the plan for the extra expenses charged to the retail shares. While the large size of the plan made it a potential target for this sort of fee litigation, the fiduciaries might have been surprised at their exposure because they had utilized professional investment consultants and advisors. The fiduciaries were also familiar with the different fee structures of retail and institutional share classes. While the court did not find that the use of retail class shares would necessarily be a fiduciary breach, the missing piece of protection for the fiduciaries was a good record of review of the plan’s overall administrative costs and the prudent management of asset-based fees used to cover those costs. Quarterly reviews of net investment performance without also reviewing asset-based fees and reasonable plan costs allowed the court to conclude that the plan fiduciaries breached their duty of prudence by using certain retail mutual fund shares instead of the institutional shares. This is an evolving area of law affecting 401(k) plans and will require enhanced administrative work by all plan fiduciaries. (Tibble v. Edison International, C.D. Cal. 2010)