Payment Options for Plan Expenses
In this issue:
- Expenses Borne By Employer
- Administrative Expenses Payable From Plan Assets
- Allocation Methods
- Allocate Fee to Specific Participant
- Pro Rata or Per Capita Allocation
- Using Forfeitures to Pay Expenses
- Defined Benefit Plans
- Plan Document and Disclosure Requirements
- DOL Proposals
Qualified retirement plans provide tax deductible benefits for employers and employees, as well as an opportunity for significant savings for the post-retirement years. But these plans require adherence to numerous governmental regulations, and there are costs involved in the establishment and ongoing maintenance of the plan.
The list of expenses includes the preparation of plan documents, recordkeeping and government reporting, to name just a few. It is important that these functions be carried out by trained professionals who are familiar with the Internal Revenue Service (IRS) and Department of Labor (DOL) rules and regulations for qualified plans.
Many of these expenses are permitted to be paid from the assets of the plan, although certain expenses must be paid by the sponsoring employer. In hard economic times, employers who have been footing the bill for administrative expenses may choose to reconsider and have some of the fees paid from the plan assets.
This newsletter is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this newsletter without first seeking the advice of an independent tax advisor such as an attorney or CPA.