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
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, ESOPMomma and Lou S. 3 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
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