Plan vs Settlor Expenses

[Guest meggie]

Company stock was an investment option under the 401k plan. The employer removed the stock as an investment option under the plan and liquidated the fund so all assets are in cash. Sufficient notice was provided to affected plan participants. Each "stock account" was mapped to a guaranteed account. Each affected participant's account absorbed the stock liquidation transaction fees.

My question is - should the client reimburse the affected accounts for the fees--implying that this should have been a settlor expense ? Is this a fiduciary breach? Thanks.

[Guest richardl]

I believe it is the option of the plan sponsor. Our company makes it a settlor expense. I do not believe it to be a fiduciary breach.

Rich

[QDROphile]

The IRS has taken the position that commissions on stock transactions cannot be paid or reimbused by the employer. The payment of the commission by the employer would be treated as a contribution.

However, you may have a different situation where the employer has changed plan design and the sale of stock was not really and investment transaction (which is administrative) as much as a settlor function because it was done soleley to to effect the plan design change.