DOL investigation highlights risks and rewards of employers' recouping benefit plan costs.

• Author: Weinberger, Mark
• Position: Employee Retirement Income Security Act of 1974

The Department of Labor (DOL) recently launched an enforcement initiative in the Midwest Region focusing on the use of retirement plan assets to pay plan administration costs. The government is taking a very hard line, especially on expenses involved in maintaining a plan's qualification (e.g., the cost of required amendments or a determination letter), which the government claims should be split between the plan and the employer. Although there are strong arguments that a plan should pay the full cost, most employers are yielding on this issue.

The DOL investigations highlight the risks of misinterpreting ERISA requirements governing the use of qualified plan trust assets to pay plan expenses. Such expenses include fees for third-party service providers (such as actuaries, auditors and lawyers), as well as reimbursement of the plan sponsor for facilities and services provided to the plan. Although the DOL plan expense audit initiative is currently limited to employers in the Midwest Region (Colorado, southern Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming), it is considering expansion of the program to other regions.

ERISA Standards

The DOL investigations do not negate an ERISA plan sponsor's right to pass appropriate administrative expenses on to the plan. ERISA Sections 403(c)(1) and 404(a) (1) (A) specifically permit payment of expenses from plan assets to defray the reasonable costs of administering the plan.

Whether a particular expense is...