On January 1, 2012, certain fee disclosure regulations go into effect that will impact many registered investment advisors, plan administrators, plan fiduciaries, and other individuals and entities who provide services to, and receive fees from, ERISA-governed retirement plans. These regulations may also impact certain private investment funds, collective trusts and private equity partnerships.

Under ERISA and the Internal Revenue Code, the general rule is that the providing of services to, and receiving a fee from, a retirement plan pursuant to a contract or arrangement constitutes a prohibited transaction. Obviously, however, such contracts and arrangements do exist. (In fact, they are necessary in order for a plan to operate.) This is because such contracts and arrangements generally fall under an exemption to the prohibited transaction rules that allows for contracts and arrangements between a plan and a service provider that are “reasonable” and “necessary” for the plan, if “no more than reasonable compensation is paid.”