Reversion of Plan Assets

[Guest m thom]

Within the past year I have had to deal with several p/s plans in which forfeitures were returned to the plan sponsor to offset plan expenses. To me this appears to be a prohibited transaction, plain and simple. Is there something I am missing?

[LCARUSI]

I'm sure you'll get a more definitive response than mine, but here are my thoughts:

1) The plan documents must allow the plan to pay expenses.

2) The expenses in question must be expenses that qualify for payment by the Plan.

3) Even if (1) and (2) are satisfied, I still think it's a bad idea to do it that way. Instead, the Plan should pay the expenses directly.