How would you advise client on correction of this "reversion?"

[card]

A client has discovered that it has inadvertantly paid SERP administrative expenses from it's DB plan's assets. The amount involved is small- $2,500.

Clearly, the client should reimburse the plan. But how?

This would not seem eligible for EPCRS, because it is probably a reversion of assets.

It would not seem eligible for correction under VFC because it is not a "loan."

It is also presumably a prohibited transaction.

Is the simplest correction methodology to reimburse the plan, with lost earnings, and pay the excise tax?

Thanks for any ideas.

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[Lynn Campbell]

What are the : "SERP administrative expenses"? Does the Plan permit payment of expenses from the Plan?

[card]

Hi-

The SERP expenses are actuarial expenses relating to the top-hat nonqualified plan that provides benefits in excess of the DB plans.

Clearly those expenses are not payable from the qualified plan trust. The actuary sends a seperate bill with respect to it's SERP charges. It just got mixed up with the DB plan's bills and improperly paid from DB plan assets.

Thanks-

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[david rigby]

How about having the sponsor say "Oops", reimburse the trust, and go on to more important things?

[card]

Ooops! Did I mention DOL is currently in there auditing the plan?

But I think you are right. From a practical perspective, just get the dollars back in. Client has suggested simply having the actuary send the next bill to the trust showing an overpayment, and a credit balance. So the trust will be made whole with its next payment to the actuary (but without any earnings adjustment).

Seems like the path of least resistance.

Peace, bro.

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[there should be a de minimis rule for these situations]