DB Plan - Reimbursement of Plan Expenses?

[Guest Gen. Burnside]

DB plan sponsor pays reasonable plan expenses (actuarial fees, PBGC premiums) from company assets. Can the plan sponsor be reimbursed from the trust from the trust for these expenses?

For example,

Plan Sponsor ABC receives invoice from Actuaries-R-Us for $50,000.

ABC pays invoice out of company assets.

ABC then requests reimbursement of $50,000 from plan assets, determining that they are reasonable plan expenses.

Can/should trustee reimburse ABC for these expenses?

Thanks!

[Andy the Actuary]

Though this is a payment to a party-in-interest, apparently the DOL allows it so long a (preferably written) agreement exists to do so. It is cautioned not to let too much time pass between the employer's receipt of the 3rd party invoice and the Plan's reimbursement. Never having done this, I have no thoughts on how you would record this payment on Schedules H and C.

[QDROphile]

Look to the published prohibited transaction exemption for guidance about terms of the agreement.

[Guest Gen. Burnside]

Link?

Look to the published prohibited transaction exemption for guidance about terms of the agreement.

[flosfur]

DB plan sponsor pays reasonable plan expenses (actuarial fees, PBGC premiums) from company assets. Can the plan sponsor be reimbursed from the trust from the trust for these expenses?

...............

I know this doesn't answer your question but why not make life simple and invoice the plan trustee(s) and then the trustee(s) pay the bills from the plan assets. Cut out the middle man!

On the other hand, consulting fees for sponsor initiated special studies may not be payable from the plan assets as they are not "normal admin" expenses.

[QDROphile]

PTE 80-26, as amended

[Guest Gen. Burnside]

flosfur-

That would be the trustee's preference, for sure, but getting the plan sponsor to cooperate is the issue.

They are typically timely in requesting reimbursement from the trust, but the trustee would certainly prefer to make the payments directly rather than issue payments to the sponsor.

Thanks to all for your input.

[ak2ary]

DB plan sponsor pays reasonable plan expenses (actuarial fees, PBGC premiums) from company assets. Can the plan sponsor be reimbursed from the trust from the trust for these expenses?

For example,

Plan Sponsor ABC receives invoice from Actuaries-R-Us for $50,000.

ABC pays invoice out of company assets.

ABC then requests reimbursement of $50,000 from plan assets, determining that they are reasonable plan expenses.

Can/should trustee reimburse ABC for these expenses?

Thanks!

You should be really clear on one point....ABC's opinion on the reasonableness of the plan expense may not be material. It is the Trustee's responsibility to determine whether the expense is reasonable. If ABC has retained no rights as trustee and has appointed a true (as opposed to directed) trustee, then the trustee will have to review the expenses submitted by ABC.

[Guest Gen. Burnside]

In this case, the trustee is directed.