Plan Assets used to pay self correction expenses

[Guest ccl]

Can a defined benefit plan use its own plan assets to pay expenses related to self-correcting a plan document problem? The fees would go to an actuary who had to correct a formula that was calculated wrong by a law firm. Any guidance would be helpful.

Thanks

[Everett Moreland]

There is another thread on this topic. My memory is that most of the posters thought that plan assets should not be used to self-correct in the situation discussed there. I believe the question is whether the expense is a reasonable administration expense, and believe that in most cases the answer will be that it is. But that is a complex analysis for which you probably can't get a reliable answer (only ideas) here.

[Guest ccl]

There is another thread on this topic. My memory is that most of the posters thought that plan assets should not be used to self-correct in the situation discussed there. I believe the question is whether the expense is a reasonable administration expense, and believe that in most cases the answer will be that it is. But that is a complex analysis for which you probably can't get a reliable answer (only ideas) here.

Anyone have a link to that old thread?

[Effen]

There is lots of discussions you might want to look at. Do a search for "settlor". Also, there is a lot on the DOL web site about paying fees - do a search for settlor expenses.

My understanding is that fees for necessary administrative services can be paid by the fund, however fees that are not necessary for the annual admin can not. For example, if the employer would like a study prepared to increase/decrease benefits, those fees should not be paid by the plan because they aren't "necessary".

It seems to me the expenses related to a correction should probably not be paid by the trust, but there may be reasons why it would be permitted.

[Everett Moreland]

There is another thread on this topic. My memory is that most of the posters thought that plan assets should not be used to self-correct in the situation discussed there. I believe the question is whether the expense is a reasonable administration expense, and believe that in most cases the answer will be that it is. But that is a complex analysis for which you probably can't get a reliable answer (only ideas) here.

Anyone have a link to that old thread?

http://benefitslink.com/boards/index.php?showtopic=39661