Qualified Retirement Plan

qualified retirement plans provide benefits tax deductible for employers and employees. But these plans require compliance with government regulations, and there are costs involved in the creation and ongoing maintenance plan.

Many expenses are allowed to pay the plan's assets, although some costs must be paid by the employer.

The Department of Labor (DOL) does not pay fees to the plan assets, if they benefit only the plan sponsor. An example would be the preparation of the original project document, preparation of plan amendments volunteers, and certain termination fees.

The DOL does not allow for costs associated with administering the plan to be paid by the plan if they are prudent, reasonable and permitted by the plan document. The latter provision is really important. An example of possible administrative costs that may be borne by the participant in the plan:

1) keeping records of participants
2) Preparation of benefit statements
3) Summary of Annual Reports
4) The notice of automatic enrollment
5) Plan amendments required by changes in law
6) costs related investment
7) Trustee fees
8) IRS determination letter requests

The distribution of these authorizations may be made using one or both methods allowed. The first is the attribution of a "per capita" basis and the second is a rate of "pro" basic.

per capita means that the amount allocated is also based on the number of participants in the plan. Pro allocation of resources is proportionately prorated on the basis of account balances.

Some costs are more affected by head and others are better at using the method pro capita. Again, this is another reason for you to stay by your administrator or change a director who will help you make these decisions before they read a story like mine.

Expenses can be paid from plan assets of the plan document approval plan settlement charges, or is silent on the payment of fees even if it is not necessary to provide such details. The plan documents expressly prohibiting the payment of costs may be amended prospectively to delete that provision and allow the plan to pay expenses in the future. However, the cost of this amendment must be paid by the employer as a deliberate alteration. Sorry

Participants must be informed if the spending plan can be deducted from their accounts. This information should be included in the summary description of the plan (SPD), which must be distributed to each employee entering the plan.

Some plans provide that eligible expenses can be paid on account of confiscation. The impact this will depend on how seizures are treated according to the terms of the plan. Some seizures can be used to make contributions that the employer would normally without confiscation. Some seizures can be used to pay administrative expenses. What is the plan document to allow?

Employers have the option to pay certain costs of a plan called the business or assets of the scheme, in which case the plan to share the burden of these costs. The DOL has established rules to determine what charges may be paid by the plan and the allocation methods permitted between accounts.

What is your plan document say on spending? It is now a good time to investigate.

For more information on business planning and qualified plans please visit Hargrave & Associates, LLC website http://www, Hargrave-lyons.com