Paying Expenses with Plan Assets

Whether your organization’s retirement plan has been up and running for several years or you are looking into what would be involved in sponsoring a plan, you may have questions about which plan-related expenses can be paid by the plan and which expenses the employer is responsible for paying. Federal pension law (ERISA) allows plan fiduciaries to use plan assets for the payment of reasonable expenses incurred in administering the plan, including expenses for:

• Plan recordkeeping
• Accounting fees
• Safekeeping of plan assets
• Periodic compliance auditing
• Preparation of legally required documents, such as Form 5500
• Claims processing
• Third-party administration
• Routine nondiscrimination testing
• Participant communications
• Investment advisory fees

So-called “settlor” expenses — expenses related to the establishment, design, or termination of a plan, including legal and consulting services — are considered business expenses that can’t be charged to the plan. The DOL has issued guidance in the form of hypothetical situations to help plan sponsors determine what is and what isn’t a settlor expense.