What is the general concensus out there regarding paying audit fees out of forfeiture dollars. If your plan allows administravtive fees to be paid from forfeiture dollars, would an audit fee fall into this category? Per the regs, it states that compliance costs include the preparation of the form 5500 annual report (and other tax forms) and nondiscrimination testing. If administrative services are provided seperately, compliance expenses are generally included in the base charge rather than seperatley priced. (Which still leaves a grey area).

My opinion regarding the audit fees falls into "it's a required expense" When plan participants fall over a certain threshold, an audit is required. And because it is required, wouldn't that be classified as an administrative expense? I was just wondering what other plan administrators are thinking about this or if this has been addressed before.

Any feedback would be appreciated.

Thanks,

Cynthia

I agree that the audit expense is an acceptable administrative expense. As you say, 5500 preparation fees are permitted and the audited annual report is required for the 5500 filing.

Sure audit fees can be paid with plan assets. Don't forget Trustee fees and recordkeeping fees.