1. Follow the Payment and Identify the Decision-Maker
Start with a service payment, property purchase, loan, or asset transfer. Record its date, amount, recipient, purpose, and authorizing person. Separate documented facts from assumptions.
Confirm ERISA Coverage
Confirm that the retirement plan falls under ERISA. These federal standards apply nationwide; governmental plans and many church plans are generally excluded.
Identify the Recipient’s Relationship to the Plan
A “party in interest” can include the employer, fiduciaries, service providers, and certain related people or entities. An outside recordkeeper can qualify without insider ownership. Identify the relationship that places the recipient within this definition.
Identify Who Exercised Authority
Identify who selected the provider, approved the transaction, or controlled the assets. Fiduciary status depends on actual functions, not just a title.
2. Distinguish Party-in-Interest Transactions from Self-Dealing
ERISA §406 addresses two distinct concerns. Section 406(a)(1) generally bars a fiduciary from causing specified transactions with a party in interest when the fiduciary knows or should know the relevant facts. Covered transactions include sales, leases, loans, services, and transfers or uses of plan assets, subject to applicable exemptions.
Look for a Fiduciary’s Personal Interest
Section 406(b) separately prohibits a fiduciary from using plan assets in the fiduciary’s own interest or representing an adverse party in a plan transaction. It also bars accepting personal consideration from a party dealing with the plan in connection with a transaction involving plan assets.
Connect the Arrangement to Specific Records
| Suspected Arrangement | Facts and Records to Examine |
|---|---|
| Payments to a recordkeeper or adviser | Services performed, fee formula, recipient, and additional compensation |
| Sale, lease, or loan involving the employer or an affiliate | Ownership relationship, transaction terms, valuation, and payment history |
| Personal payment to a fiduciary connected to a plan transaction | Payer, recipient, payment purpose, and connection to the fiduciary’s decision |
Payments to a recordkeeper or adviser
- Facts and Records to ExamineServices performed, fee formula, recipient, and additional compensation
Sale, lease, or loan involving the employer or an affiliate
- Facts and Records to ExamineOwnership relationship, transaction terms, valuation, and payment history
Personal payment to a fiduciary connected to a plan transaction
- Facts and Records to ExaminePayer, recipient, payment purpose, and connection to the fiduciary’s decision
Keep the Two Legal Questions Separate
Section 406(a) can apply without a kickback. A personal payment to a fiduciary raises separate questions that fee comparisons cannot resolve.
3. Check the Claimed Exemption against the Actual Arrangement
ERISA §408(b)(2) permits certain necessary plan services under reasonable contracts or arrangements for no more than reasonable compensation. Compare services with total compensation, including third-party payments absent from invoices.
Ask How the Exemption’s Conditions Are Met
Ask which exemption supports the arrangement and how its conditions are met. Covered providers must give required disclosures to the responsible plan fiduciary, distinct from fee information provided to participants.
Check Whether the Exemption Covers Self-Dealing
The §408(b)(2) service exemption does not excuse §406(b) conduct. Reasonable compensation does not resolve self-dealing. For another claimed exemption, check its conditions and coverage.
4. Match Each Question to an Available Document
Different employee benefits records answer different questions. A statement may show a charge without revealing the provider’s total compensation or ownership.
Compare What Each Document Shows
| Document | What It Can Clarify | Main Limitation |
|---|---|---|
| Account statements and participant fee disclosures | Charges, dates, and disclosed services | May not reveal the full payment chain |
| Summary Plan Description (SPD) and governing documents | Administrator identity, plan structure, and operating terms | Usually do not explain each transaction |
| Form 5500 and available attachments | Reported expenses, providers, and certain transactions | Reporting varies; entries need context |
| Relevant contracts and compensation disclosures, if available | Services, fees, indirect compensation, and relationships | Access rights and disclosure recipients vary |
Account statements and participant fee disclosures
- What It Can ClarifyCharges, dates, and disclosed services
- Main LimitationMay not reveal the full payment chain
Summary Plan Description (SPD) and governing documents
- What It Can ClarifyAdministrator identity, plan structure, and operating terms
- Main LimitationUsually do not explain each transaction
Form 5500 and available attachments
- What It Can ClarifyReported expenses, providers, and certain transactions
- Main LimitationReporting varies; entries need context
Relevant contracts and compensation disclosures, if available
- What It Can ClarifyServices, fees, indirect compensation, and relationships
- Main LimitationAccess rights and disclosure recipients vary
Direct Written Requests to the Plan Administrator
Under ERISA §104(b)(4), participants may make written requests to the plan administrator for specified documents, including the latest SPD, annual report, and instruments under which the plan is established or operated. Identify the documents and relevant period, and retain the request and response.
Recognize the Limits of Document Access
This right does not automatically cover every invoice, email, or committee minute. Discussing a provider’s performance does not alone make investment-review minutes disclosable. Whether a contract or internal record qualifies depends on its function and may require closer review.
5. What Cunningham Clarifies about Service Transactions
In Cunningham v. Cornell University, decided April 17, 2025, participants challenged recordkeeping arrangements under §406(a)(1)(C). The Supreme Court held that plaintiffs need not plead the inapplicability of §408 exemptions to state that claim. Defendants relying on an exemption bear the burden of pleading and proving it.
Apply the Decision without Assuming a Violation
The Court reversed and remanded without deciding that Cornell’s fees were unlawful. Identifying a service transaction and supporting an exemption are separate tasks. Missing exemption information alone does not establish a violation.
6. Prepare a Focused Summary for Further Review
Summarize the date, amount, parties, relationships, decision-maker, and supporting documents on one page. Flag inconsistencies between records and responses. Preserve original files and correspondence with receipt dates.
Should You Wait Until You Have Every Document?
No. Seek review with available records and identify gaps, especially if unexplained payments continue or a fiduciary may benefit personally. Do not treat a pending document request as extending a legal filing deadline.
Does a Form 5500 Entry Settle Whether the Transaction Was Lawful?
No. Reporting a payment does not establish that an exemption applies. Likewise, the absence of a particular entry does not prove that no transaction occurred. Compare the filing with the other available records.
28 Oct, 2026
