Schedule C-reimbursements to plan sponsor

[Guest Dolores]

Are expense reimbursements to plan sponsor reported on Schedule C if over $5,000?

[Peter Gulia]

Whether a reimbursement to an employer that maintains the plan is reported in Schedule C or elsewhere in Form 5500 can turn on the nature of the plan’s expense that was reimbursed or obligated to be reimbursed.

Schedule C focuses on payments for services. If, for example, the plan’s expense was for a person’s labor, such an expense (if more than the threshold, which isn’t always $5,000) is reported in Schedule C.

If there is a plan expense for someone who works for the plan and less than full-time for another employer, or who for convenience isn’t paid directly by the plan, the plan administrator and the plan’s auditor might want the comfort of a lawyer’s opinion that the expense and the indirect payment for it are exempt prohibited transactions. Even if an exemption’s conditions are met, a plan fiduciary can’t use its fiduciary role to select as a service provider a person in whom or which it has an interest.

A plan’s expense for buying equipment, supplies, and other goods (not services) isn’t reported in Schedule C, but instead on Schedule H’s Part II line 2i(4) (other administrative expenses).