DoL Offers Fee Guidance

January 21, 2001 ( - The Department of Labor has offered plan sponsors additional guidance in deciding which plan expenses can be paid from plan assets - and which the employer must pay.

The clarification came in the form of an Advisory Opinion (No. 2001-01A), as well as six hypothetical fact situations outlining a variety of plan expense issues.

Cost of Doing Business

The guidance reaffirms the Labor Department’s long-standing position that expenses related to “settlor” functions are not reasonable expenses of a plan, and must be paid by the employer.  Settlor fees are viewed as a result of a business decision of the employer to offer benefits, rather than expenses of administering the plan itself.  These expenses include:

  • expenses of designing the plan
  • drafting the initial document
  • terminating the plan

However, the guidance does state that reasonable expenses incurred in connection with implementation of a settlor decision would generally be payable by the plan.

Those implementation activities might include:

  • drafting plan amendments required by changes in the tax law
  • nondiscrimination testing
  • requesting IRS determination letters

– Nevin Adams

There’s more information in our FEES Solutions topic .

Questions concerning the guidance may be addressed to the

Office of Regulations and Interpretations (ORI)
Pension and Welfare Benefits Administration, Room N-5669
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Attention: Settlor Expense Guidance

or by calling Louis Campagna, chief, Division of Fiduciary Interpretations, ORI, at (202) 219-8671.

On its Web site, the DoL has posted:

The Advisory Opinion
Six hypothetical fact situations