Can the fee to set up the plan be counted as a plan expense and be paid for out of the plan?
Generally, expenses incurred in connection with the establishment, termination and design of the plan relate to the employer's business activities and should not be paid by the plan. See DOL Advisory Opinion 2001-01A.
For example, if an employer has received a bill for attorney's fees related to a meeting to discuss whether a plan should be implemented and, if so, what type of plan should be established, that bill is a settlor expense and should not be paid by the plan that is established as a result of that meeting. However, once an employer decides to establish or terminate a plan, necessary administrative expenses incurred to implement and maintain the plan, or to complete the termination of the plan, could be paid from plan assets.
The following fees associated with the establishment of a plan are considered settlor fees and should not be paid with plan assets:
- Fees for plan design proposals
- Legal fees regarding corporate issues relating to the establishment of the plan
- Plan document fees