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TPSnewsflash BE04-0026: Question: Is it appropriate to charge plan expenses only to terminated participants? Answer: Field Assistance Bulletin (FAB) 2003-3, the Department of Labor (DOL) states reasonable plan expenses can be allocated to individual accounts of plan participants. Made on either a pro rata (to assets) or per capita basis, these allocations can be decided by fiduciaries depending on the nature of the expense. The DOL goes on to state in the FAB that is was permissible for an employer to pay expenses only for participants who were currently employed. Thus, only the accounts of terminated participants would be charged for their share of the expense. The IRS concluded in Re. Rul. 2004-10 that it is acceptable to allocate reasonable expenses, primarily because similar expenses would be charged in the marketplace. Keep in mind, expenses must be proper plan expenses, and both the amount and allocation method must both be reasonable. In addition, the participants must be notified of the expenses in the Summery Plan Description. Additional TPSNewsflashes similar to this one can be found on our website at: www.pensioninsider.com/ouradvice.html ThePensionSpecialists,Ltd. holds dearly its commitment at providing superior service and superior advice to its current clients and future prospects. This newsflash is published as general information and is not intended to constitute legal advice in any manner. Specific information related to this topic can be obtained from the DOL and IRS.
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