Benefit Plan Policies: Shared Expense Policy

Larry Beebe, CPA

In this series, we are reviewing the written plan policies needed to help your benefit plan stay compliant and operate most effectively. For a full list of the necessary policies and why your plan should implement them, click here.

An employee benefit plan often shares office space and/or other goods and services with other employee benefit plans or with related sponsoring organizations. If this sharing arrangement exists, then having a shared expense is a necessity.

The shared expense policy should include:

  • A list of those expenses that are shared with other organizations and a list of those expenses that are normally paid exclusively for the benefit of your plan. These lists may have to be updated as circumstances change.
  • The methodology of allocating shared expenses. Some expenses are split based on time allocation studies of employees, some are split based on percentage of office space used and some are split based on actual usage.
  • A description of how often an expense allocation study is performed and an indication of who will perform the allocation.
  • Who pays the shared expenses and the reimbursement terms from the other entities sharing expenses.
  • A description of the circumstances requiring a reassessment of the sharing arrangement.
  • A description of the supporting documentation required for the allocation.
  • A statement that no plan can pay more than its fair share of expenses.

For additional information on employee benefit plan policies please see the Trustee Handbook published by the International Foundation of Employee Benefit Plans.

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