Settlor or Plan Expense?

[Guest P Larson]

Does anyone have a good guidance on non-required "education" as a plan expense? In particular, it seems that general non-required "financial" education could be payable from pension/401(k) plan assets in some instances? I realize that recent settlor guidance is found in 2001-01A and some hypotheticals but I was wondering if there is any specific guidance on education not specifically related to the plan?

My initial thought on this is that a retirement plan is required to provide participants with an opportunity to make an informed decision under the plan. Financial education about retirement in general could help the participant make an informed decision. An example is Under DOL Regs, to get ERISA 404© fiduciary protection, a participant must be provided with the opportunity to "exercise control" over his account assets. The DOL Regs further state that a participant "exercises control" over his account assets only if he is "provided" or "has the opportunity to obtain" sufficient information to make informed decisions with regard to investment alternatives available under the plan.

[QDROphile]

You are not going to be able to stretch the 404© regulations to create a need for the plan to provide financial education. The regulations you describe go on to provide what is necessary to satisfy the requirement that you describe, and financial education is not on the list. In fact, the related interpretive bulletin 96-1 expressly states that investment education is not necessary to comply with the requirments of 404©. If the plan is going to provide investment education, it will have to be justified on some other rationale. Not every good ideal is a legal requirement. I am not saying that education cannot be a plan expense. I doubt that I would advise anyone to treat general investment education as a plan expense.

[Jon Chambers]

I've heard DOL opine that education is a permissible plan expense, as long as fiduciaries determine that education is necessary or desirable and cost of education is reasonable.