Checkbook Interest

[Guest TAG]

We have a cafeteria plan that earned interest on the funds placed in an interest bearing checking account. The administration is done internally and there are no fees. Also, no employees terminated so there were no expenses for the employer. Basically, everything is even except for the checkbook interest. What is the proper use/disposition of the interest amount.

Thanks for you help

TCAT

[Guest nherkowitz]

As long as the checking account is an asset of the company (and not in a trust), the interest is income to the company. It is treated like any other interest income. The company can use it however they please.

[Kirk Maldonado]

Pay the fees to you as compensation for finding out the answer to the question (a la Dogbert)?

[Guest TAG]

Hum, I may consider that. Thanks for your time.

TCAT

[Guest stan]

Are there any concerns with putting cafeteria plan assets in a segregated account (but not a trust)under the language of DOL Technical Release 92-01 (which seems to say that keeping them in general assets still affords relief from trust requirement enforcement, but segregation may not)? And, does interest earned on plan assets fall under the exclusive benefit rule (i.e. should it only be allowed to be used to pay plan expenses, and not be allowed to be used by the employer for any purpose)?