Leaderboard

Favorite answer: It depends. Personally, I prefer to have a fee for everything, and then waive the fee when appropriate. This way the client understands that we have to do some work for every request, they are "happy" when the fee is waived, and I have the fee there for me to bill for clients who do it over and over.

https://www.federalregister.gov/documents/2021/09/15/2021-19714/proposed-revision-of-annual-information-returnreports I don't think it has been finalized but I believe these are the proposed changes you are referring to which would apply to the 2022 Plan year if finalized..

I think the fact that it is non-discriminatory is too little reason to say this is fine. You have to follow the plan's provisions. I doubt there is a plan provision that says fees can be taken from any given participant's account only. If a case can be made saying it can be done based on a plan provision fine but in all the decades I have read plan documents I have never seen a plan's allocation provision that says this can be done. This is plan admin 101 here. It has to be both legal AND in the plan document not just merely legal for a plan to do it.

that said, i looked through our BPD and I only see that the administration fees can be paid against the trust. Nothing about specific apportionment that I can see.

What provision in the plan allows him to do that? Do any of the underlying documents say the plan administrator can pick and choose the accounts the fees come from?

You're going to fund the IRA and pay the taxes? That's a windfall; I wish someone would screw up my finances that way.

Plan Administrator or TPA need to issue payment to IRA for balance due to bring the gross deposit up to $40k. Recordkeeper needs to file amended 945(IRS) and whatever state form to get back taxes incorrectly withheld. Corrected 1099's need to be issued, showing 40k rollover, and 0 cash distribution with 0 taxes. Returned taxes can be paid to whoever fronted the corrective deposit. TPA and Plan Administrator can then bicker over fees and responsibility. Basic tenant of any correction, put the participant in the position they should have been in without the error, without harm. That would mean 40k in the IRA, and no tax shenanigans!!