Fees payable by the Plan?

[Guest Lorne Dauenhauer]

A qualified retirement plan is allowed to pay certain legal and/or administrative fees out of Plan assets. Other types of fees probably should not be paid out of the trust.

Is anyone aware of a good article that discusses how to determine when to pay a fee from the Plan and when not to?

As an example, if an employer hires a consultant to create a benefit formula in an existing qualified plan to maximize benefits to the HCE's (to the detriment of the NHCE's)and then hires an attorney to amend the plan for the new benefit formula, I generally believe that the employer, not the Plan, should pay such fees because they were beyond "normal" administrative practice.

Conversely, when the consultant charges the plan to prepare the annual 5500, it is probably appropriate for the Plan to pay the consultant's fees as the 5500 filing is necessary to the administration of the plan.

[Guest ERead]

So far, your assumptions sound good.

I believe they recently had a discussion on this topic on either this, or the 401(k) board. Set the message retrieval box at the top to more than 30 days, and see if you can find it. I'm not familiar with any specific articles on the subject - is anyone else?

[david shipp]

"ERISA Guidelines for Plan Payment of Plan- Related Expenses" by Gallagher and Shore in Tax Management Compensation Planning Journal (I don't have the date but I think it was the first issue in 1992).

"Use of Plan Assets to Pay Plan-Related Expenses" by Deering in the Oct. 1993 ALI-ABA Outline for the Pension, Profit Sharing, Welfare and Other Compensation Plans Seminar.