audit fees

[Guest Jennyb473]

Can a plan pay the expenses related to a large plan audit? We are leaning towards no, because the audit company is engaged with the plan sponsor to perform the audit, not with the plan. Any thougths?

[Bill Presson]

As long as an expense is not a settlor expense, the plan can pay it.

An audit is an acceptable expense because it is part of ongoing requirements for the administration of the plan.

[Belgarath]

Jenny - I think I understand your question - you are concerned that there is a prohibited transaction because the plan would be paying an expense that the employer is legally obligated to pay under the terms of the contract between the employer and the audit company. Is that correct?

If so, why not just have them mutually agree to cancel the contract and make a new contract with the plan administrator? Assuming of course that the plan contains language to allow such payment, which in my experience is pretty standard.

Perhaps some of the lawyer types will chime in with some thoughts here.

[david rigby]

... and of course,

- the Plan document must permit the payment of expenses;

- the expenses paid are reasonable.