Can the Cost of an RFP for Selecting a New Recordkeeper Be Paid From Plan Assets?

“We are a museum who recently selected a new recordkeeper as a result of a request for proposals process. Can this expense be paid from plan assets, assuming such expenses are reasonable, and the plan permits?”

Charles Filips, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

The answer from the Experts is an unequivocal “maybe”! As you may be aware from our prior Ask the Experts column on the subject, plan expenses are classified into two categories: settlor expenses, which confer a benefit on the plan sponsor, and expenses that benefit plan participants. The latter can be paid from plan assets; the former cannot.

RFPs generally relate to plan administration but not all RFPs are the same.  The Department of Labor has some excellent published guidance on the subject, with real-world examples, but unfortunately recordkeeper RFPs are not addressed.

Thus, you should seek guidance from an ERISA attorney well-versed in such matters on this issue.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Amy.Resnick@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future column.