Plan Fees

[Guest Kim Daughrty]

I have a plan where the company is closing or actually it is closed, all of the employees are terminated. The client doesn't have the money to pay for the annual fees out of the business. Can the owners/trustee's take the money out of their accounts in the retirement plan to pay these fees?

Kim

[Guest NewsToMe]

Fees directly related to the administration and compliance can be paid out of the plan.

However, fees specific to the plan's termination (studies, termination fees from the vendor) I believe are prohibited from being paid out of the plan.

[Guest Kim Daughrty]

What if they have segragated accounts. Can I just choose to take the money out of their accounts and not everyones?

[austin3515]

Absolutely - It would be a taxable distrbiution from the plan to them, but they can use their after-tax personal moneyin any way they wish--including payment of Plan fees.

I suppose you could take the portion allocable to their accounts directly from their accounts without processing the distribution. For example, you could allocate the expense pro-rata based on account balances - their portion comes from their account, and the balance comes from a distribution that they subsequently take from their account. This might be a tad aggressive, but I think their personal sacrifice to get participants paid out will be appreciated by the government, who otherwise would be left to deal with an orphan plan (high on their list of pet peeves).