Plan expense reimbursement question

[Guest newbenefitsguy]

Hi all -

(Apologies if this is a stupid question - I'm relatively new to the field).

Plan sponsor handles some plan administrative functions in-house, and seeks reimbursement for administrative expenses accrued during a given year shortly after the end of the year.

Please let me know whether my thinking below is correct:

First part of the analysis would be whether the expenses are properly reimbursable from plan assets under ERISA 404(a)(1)(A) (reasonable, non-settlor, expenses, whose payment is permitted under plan terms). Additionally, because services are provided by the plan sponsor, the amount paid by the plan may not exceed the sponsor’s “direct expenses” (using the but-for test).

Assuming the expenses are properly reimbursable from plan assets, the question is whether reimbursement is timely - to the extent that reimbursement is sought for expenses "fronted" by the plan sponsor (by paying salaries of admin personnel and other reimbursable costs using employer money) 60 or more days prior, this must be done pursuant to a loan agreement compliant with PTE 80-26. To the extent that the expenses have not been pre-paid by the plan sponsor, there is no issue with their reimbursement by the plan.

Is my analysis above correct? Is there anything else I am missing?

Thanks in advance!

[Jim Chad]

FWIW I think you are correct.

Except for one issue. I am wondering about paying salaries of Plan sponsors employee. Is this allowed?