Allocating Plan Expenses

There has been widespread discussion within the retirement planning community regarding what expenses are allowed to be charged to selected participants and those which must remain a true plan expense.  The DOL addressed this issue in 2003 and the IRS followed suit in early 2004.  Below is a sampling of expenses which now may be charged to a particular individual versus the overall plan:

-         administrative expenses for handling

-         administrative expenses for the calculation and handling of benefit payouts

-         reasonable expenses for administering the plan may be charged to the vested account balances of separated participants

-         QDRO (Qualified Domestic Relations Order) and QMCSO (Qualified Medical Child Support Order) – expenses incurred in the determining of whether either of these two types of orders are deemed qualified may be charged to the affected participant.

As always you may continue to charge loan fees to the respective participant making the loan request.

Our practice at Dynamic Pension Services is to have the participant making the particular request bear the burden of the administrative charges associated with that request.  The only time this default does not hold true would be if the Employer has decided to pick up all expenses involving the plan or if the plan’s particular funding vehicle is not set up to allow individual plan participants to be assessed certain plan expenses.

Please note, if there are not sufficient funds in the participant’s account to cover our fees, the Employer will be invoiced for the difference.