Plan Fees from owners account

[austin3515]

100% Owner of the business wants the plan's admin for two quarters (around $1,000) paid from just his own 401(k) plan account. Does anyone see a problem with this? I think it should be treated as a taxcable distriubtion to the owner considering the circumstances. It just smells like an in-service distribution disguised as a fee.

[PFranckowiak]

What does the document say? I would think that fees either have to be prorata, or specific fees for that participant.

[austin3515]

Let's say hypothetically we amended the plan to allow for it. Would that be a permissible amendment?

[mbozek]

Why does the owner want to reduce his account balance? Why not deduct it as an employer expense in connection with the plan under reg. 1.404(a)-3(d)?

[austin3515]

Not to be fresh, but just going out on a limb here, I'm guessing he has no money.

[Lou S.]

Let's say hypothetically we amended the plan to allow for it. Would that be a permissible amendment?

Sounds like discrimination against an HCE which the IRS is generally cool about. DOL is usually worried about non-owner employees so I personally don't see a problem with it. But I can't say that I've ever seen it done quite like this either.