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 firstname.lastname@example.org
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: