The DOL's opinion letter provides that any reasonable expenses incurred in implementing a plan termination may be payable by the plan. These expenses include (1) auditing the plan, (2) preparing and filing the annual reports, (3) preparing participant benefit statements, (4) calculating benefits, (5) notifying participants and beneficiaries of their benefits under the plan, and (6) amending the plan to effectuate the termination. Expenses attributable to amending a plan to maintain its qualified status and obtaining a determination letter on the status of the plan in connection with its termination confers a benefit both to the plan sponsor and the plan's participants. Where the plan permits the payment of expenses by the plan, the DOL stated that a portion of the expenses may be paid by the plan. Further, where the plan sponsor is acting as an employer and as a fiduciary on behalf of the plan's participants, it may be necessary, to avoid violating ERISA, to require an independent fiduciary to determine the allocation of expenses for such activities between the employer and the plan.
It should be noted that the DOL's advisory opinion was granted to the Insurance Commissioner of California ("Commissioner") who had taken over an insolvent insurance company that had a qualified employee benefit plan. The DOL reasoned that because the Commissioner did not stand to benefit in its own interest from (1) maintaining the qualified status of the plan and (2) receiving a determination letter, the Commissioner need not engage an independent fiduciary to allocate expenses incurred in connection with those activities.
However, a private plan sponsor who derives a benefit from a plan's qualified status may be required to engage an independent fiduciary when allocating expenses between settlor and fiduciary plan functions when establishing, maintaining or terminating a plan.