Can CPA audit fees be paid from the plan's assets if the plan sponsor

[Guest Lisa Flagg]

What are the chances of being paid by the Plan for CPA audit fees when the sponsor has declared bankruptcy. We have been told that there is very little chance of receiving anything on the outstanding bill from the sponsor. Is there anything preventing me from billing the plan directly, and what do you think my chances of collecting are? Thanks.

[david rigby]

I suggest getting your invoice paid in advance. Alternatively, the bankruptcy trustee might pre-approve the work, in writing, so that your invoice will be paid later.

[Guest Lisa Flagg]

Thanks for the reply, but it is too late for that. This is an old invoice, never paid, and we have been told that the chance of collecting anything from the sponsor is slim to none.

[Guest LeAnn Rudolph]

We have several plans that pay our audit fee from Plan assets. I believe reasonable fees for operation of the plan can be paid from plan assets - investment advisory, administration, audit, etc. I would think you would be able to bill the plan for your fee.

[Guest mo again]

I think the fees can be billed to the plan, but can the plan be forced to pay, when it is not the party who directly contracted for the services? This may have more to do with contract law than with ERISA, but I would think the answer to be no.

[Guest Rose2001]

Can a bankruptcy court be requested to pay TPA and legal fees to terminate a plan when the Sponsor is bankrupt? How?

[Guest PAUL DUGAN]

The DOL has indicated numerous times recently that audited are expenses are for the benefit of the Employer rather than the participant and therefor can not be paid by plan assets. I do not agree because audits are required by law but God has spoken.

[BeckyMiller]

See brand new DOL Advisory Opinion posted to the DOL newsroom last Friday. http://www2.dol.gov/dol/pwba/public/media/...ss/pr011901.htm

It says that you can pay these costs from plan assets, if the amounts are reasonable and the plan otherwise provides for such expenses to be paid from plan assets.

[RCK]

It seems to me that the there are two questions here:

1). Can this be paid from the Trust? The answer is probably yes, but the plan document must contain language that allows that.

2). How does it get paid? The key is to get the trustee to agree to payment and to authorize a check from the trust. This would be done best of a voluntary basis--request payment and suggest payment from the trust. I agree with mo again's question whether the plan could be forced to pay for a service that the plan sponsor has initiated.

[k man]

I think you really have one issue. That is getting the plan to actually pay the expense without having contracted as such. If the terms of the original service agreement provide that the plan will pay, you are in good shape. The bankruptcy issue may or may not be a problem in my mind depending on the answer to the above question. Pension assets or even forfeitures for that matter are not part of the "bankruptcy estate." This could be a double edge sword insofar as if you contracted with the corporation, you are really just a mere creditor and must stand in line.

Another thing you could do would be to enter into an agreement with the plan today for services. if you do this, you might want to seek the approval of the bankruptcy court.

[Kirk Maldonado]

I agree with K Man that there is only one issue, but I have a different perspective than the prior commentators.

The safest approach would be to have an independent fiduciary of the plan decide the issue. My guess is that, at least if the fiduciary was advised by competent ERISA counsel, the fiduciary would refuse to pay the bill, for two reasons. First, the plan wasn't obligated to pay it. Second, the work has already been completed.

I think that you might get a different result if you were talking about work to be performed in the future.

[Guest halka]

Wanted to add a little different slant to this subject... If you are Plan TPA and the now-bankrupt employer had contracted to pay your fees directly but the Plan clearly allows for payment from Plan assets, how long/hard should you pursue a creditor's claim in the employer's bankruptcy proceedings before (or after) collecting fees from the Plan?? e.g. do you a fidcuciary duty to aggressively pursue the claim??