In a recent Advisory Opinion, the DOL finally stood up and opined on whether accounts holding revenue sharing payments are plan assets.
Particularly, in recent years, plans have gained some access to the revenue sharing payments their representatives receive. This raises the question of whether the accounts where the money is held are plan assets.
The two types of accounts are as follows:
- Accounts on the books of a service provider from which funds are deducted under an agreement to pay plan expenses.
- Accounts titled in the name of the plan and held by a third party.
DOL has opined that “the mere segregation of a service provider’s funds to facilitate the administration of a contract or arrangement with the plan would not in itself create a beneficial interest in those assets on behalf of a plan.” When this is the case a type 1 account would not be deemed a plan asset. If however, the funds are held in a trust account for the plan or in a separate account with a bank account or other third party in the name of the plan, the funds would be an asset of the plan.
The DOL went on to stress that plan fiduciaries must, in either case, scrutinize the administrative handling of the account so as to insure that the terms of the arrangement are properly applied for the benefit of the plan.
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For more information on this topic, please contact a member of Withum’s Employee Benefit Plan Services Team.
