SPD Distribution

[Guest benefitsanalyst]

Can the cost for the distribution of SPDs to all employees in a 401(k) plan be paid out of the plan's forfeiture account? Our Plan Document does not specifically address this and we have just updated our SPD.

[Guest Nautical]

I am curious about the answer as well, but if it can, maybe put an amendment to the plan to be on the same side.

[Lori Friedman]

Step one - For a defined contribution plan, the plan document (or adoption agreement) dictates whether forfeitures are (1) reallocated to other participants or (2) used to reduce future employer contributions and/or "reasonable" administrative costs.

Step two - What's a "reasonable" administrative cost? It seems as if the cost of producing and distributing a SPD -- a required, automatic disclosure to participants and beneficiaries -- would certainly be a reasonable expense of plan administration.

Rev. Rul. 84-156 might be helpful.

[alanm]

The Firestone case determined that, if unspecified in the plan, the administrator has the power to pay plan expenses from plan assets including the forfeiture account.