penalty tax for failed adp test

[Tom Poje]

forfeitures are used to pay plan expenses.

is the penalty tax considered a plan expense for this purpose?

[rcline46]

The excise tax is essentially for contributing non-deductible monies to the plan by the sponsor. I think the sponsor has to pay, and that the plan cannot pay as it is not an administrative expense of the plan.

[JanetM]

I would agree. Failure to operate in compliance means you failed in your fiduciary responsibility, it would not be right to pay for this with plan assets.

[mbozek]

The tax under IRC 4972 and 79 is imposed on the employer, not the plan.