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And if the sponsor picks up the fees for the actives, it is particularly important that the terminated participants not be charged more than a fair share. The sponsor does not get to save on some of the fees they pick up for the actives by passing some of those fees on to the terminated people. It is not a system to be gamed by the plan sponsor (who owes a fiduciary duty to the terminated people no less than to the actives).

How is that not a violation of fiduciary standards (not to mention the possibility that what the sponsor wants to do is for the sponsor's benefit and not that of the participants)? Certainly, it would seem to be hard (if not impossible) to justify charging larger fees to terminated participants than to ongoing active participants. You only get to charge participants reasonable and necessary expenses. How would this be necessary? How big is the plan? Is this related to trying to hold the number of participants down to avoid needing an auditor's report? Even if it is, I don't think you get to discriminate against terminated participants to force them out.

For several years we have used fees to former participants to get them to move their assets - rollover or whatever. We used a nominal $100/yr - hoping that would be enough to get them to move. We're finding it often is not working - they get a letter each year, they do nothing, and we remove the $100 to cover some employer costs. Does anybody know if there is any guidance on how much is allowable. One employer wants to up the charge to $250 - still just to get them to move.