Plan A's expenses paid with Plan B's assets

[Guest BenefitsGal5]

DOL auditor found that the expenses of Plan A were mistakenly paid with assets of Plan B. Sponsor has corrected by remitting amount Plan B mistakenly paid plus lost earnings to Plan B. DOL is satisfied with correction.

In terms of the IRS, however, based on my reading of Code Section 4975, this failure does not seem to fit squarely within the definitions of a "prohibited transaction" and "disqualified person."

I wanted to get thoughts on whether this is a PT requiring the filing of a Form 5330 and the payment of excise tax. If it is, what is the "amount involved?" Is it amount of the expenses or the lost earnings on such amount?

Thanks.

[Guest Quacka]

BUMP!

I have this same issue. The DOL auditor's parting shot was to refer the case to the IRS...she told us we need to prepare and file Form 5330.

I am stuggling to determine whether the "amount involved" is the principal amount of the improper plan expenses, or the interest on that amount. Anyone know?