Jakyasar Posted July 6, 2023 Posted July 6, 2023 I was asked the following (this is out of my realm): Partner A in Plan Origin terminated and had assets that required some attorney's involvement for liquidation (do not know the details) and Plan Origin is located in State A. Now ex-Partner A moves to State B and starts a PS plan - Plan Destination. While in Plan Origin, with the help of the attorney, ex-Partner A was able to liquidate the assets within Plan Origin (1M dollars) and the attorney's fee was 20k i.e. 2% of the assets. Once all settled with Plan Origin, 1M dollars were rolled over to Plan Destination. This ex-Partner A now wants to pay the attorney's fees from the assets which are now in Plan Destination. Can he do that and if yes, is there a cite for it? My comment would be, no, as all events took place within Plan Origin and once rolled over to Plan Destination, it is no longer a Plan Destination related expense. Curious what others have to say. Thank you QKA, QKC, QPA, CBS
Peter Gulia Posted July 6, 2023 Posted July 6, 2023 Are you sure there was a distribution from Plan Origin, followed by a rollover contribution into Plan Destination? Or might there have been a plan-to-plan transfer of assets and obligations? Also, Plan Destination’s administrator and trustee might evaluate whether the attorney had (and perhaps still might have) a charging lien regarding some claim the attorney might have helped perfect. The plan fiduciary should get its advice from a lawyer who is (i) independent of the to-be-paid attorney, and (ii) competent to spot and evaluate the many exclusive-benefit, prohibited-transaction, and other ERISA title I (if it governs either plan) and Internal Revenue Code issues. This is no advice to anyone. I mention it only as a possible variation, in some circumstances, against the general principle that an employee-benefit plan doesn’t pay another plan’s expenses. Jakyasar, Lou S. and ESOPMomma 3 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
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