emploer reimbursing plan

[Santo Gold]

Last year, and the plan sponsor received a QDRO for a participant, who also happened to be the owner. QDRO was adhered to but incurred some significant legal expenses in handling the QDRO, which was paid from the plan. the assets are pooled so everyone was affected by this expense.

The owner realizes now that wasn't really the best way to handle the expenses and wants to deposit the amount of the expenses into the plan from an employer account.

(1) Can the employer do this?

(2) if so, is it correct that the ER cannot make a deposit and treat it as an ER contribution for deductibility purposes (o/wise it woudl have to be allocated as an ER contribution)

(3) Can the ER deposit the amount into the plan and claim it as a business expense?

(4) If "No" to 2 and 3 above, can ER simply deposit the amount to make up for the expense and not take any expense/deduction for the deposit?

thanks

[ETA Consulting LLC]

(1) Can the employer do this?

Sure, but tread lightly. Your argument is that employer is reimbursing the plan for an excessive expense paid from the plan. Like any argument, there is certainly an argument to the contrary, but that's why you retain detailed documentation on the transaction.

(2) if so, is it correct that the ER cannot make a deposit and treat it as an ER contribution for deductibility purposes (o/wise it woudl have to be allocated as an ER contribution)

No. It's not a contribution, but an expense. You have to remain as consistent as possible.

(3) Can the ER deposit the amount into the plan and claim it as a business expense?

This would appear consistent.

(4) If "No" to 2 and 3 above, can ER simply deposit the amount to make up for the expense and not take any expense/deduction for the deposit?

thanks

I suppose this is not applicable since "3" is effectively "yes".

Good Luck!

[mbozek]

Last year, and the plan sponsor received a QDRO for a participant, who also happened to be the owner. QDRO was adhered to but incurred some significant legal expenses in handling the QDRO, which was paid from the plan. the assets are pooled so everyone was affected by this expense.

The owner realizes now that wasn't really the best way to handle the expenses and wants to deposit the amount of the expenses into the plan from an employer account.

(1) Can the employer do this?

(2) if so, is it correct that the ER cannot make a deposit and treat it as an ER contribution for deductibility purposes (o/wise it woudl have to be allocated as an ER contribution)

(3) Can the ER deposit the amount into the plan and claim it as a business expense?

(4) If "No" to 2 and 3 above, can ER simply deposit the amount to make up for the expense and not take any expense/deduction for the deposit?

thanks

three questions:

1. what was the nature of the significant legal expenses?

2. what does the plan say about who is responsible for expenses arising from the review of a QDRO?

3. What does the plan provide about types of contributions can be made to reimburse the plan for expenses relating to plan administration?