DoL Offers Some Relief on Costs, Lawyer Says

Washington, DC, January 9, 2002 ( - With potential GUST and EGTRRA amendments staring plan sponsors in the face, they are going to find it easier to pay for amendment drafting and set-up costs.

That’s because the Department of Labor (DoL) now allows plans to charge administrative expenses for amendments designed to maintain a plan’s tax-qualified status to the plan itself, ERISA attorney R. Bradford Huss told an American Bankers Association conference here. 

On the other hand, costs associated with policy decisions on how to structure the plan can’t be charged to the plan, Huss said.

That’s why sponsors should get revamped vendor invoices breaking down their costs into the two categories, the attorney said.

Based on the latest DOL opinion letter issued last year, Huss said plan sponsors could charge their plan for costs of:

  • determining a participant’s plan benefit
  • getting an Internal Revenue Service determination letter
  • doing non-discrimination testing unless it’s in advance of a plan change
  • complying with ERISA disclosure rules (such as preparing and distributing Summary Plan Documents)

According to Huss, plan sponsors can’t have the plan pay for:

  • analyzing new laws to determine the sponsor’s obligations
  • activities in advance of a plan change such as union negotiations or actuarial analyses
  • an amendment to allow a spin-off of plan assets