Overnight Shipping Expenses

[Guest andmik]

A recordkeeper provides distributions checks via us mail as part of its service. Typically if a plan sponsor wants something overnighted via FedEx or other providers, the plan sponsor provides its FedEx Acct #.

If a participant wants FedEx service they will typically provide a credit card number.

ISSUE/QUESTION: A participant wants his retirement account to be reduced by the overnight fee, but it seems illogical since the fee should be an after tax expense but by reducing the account for the fee amount this is creates a pre-tax expense.

Any thoughts on the legitimacy of charging a participant's account for the expense of overnighting a distribution check they want expedited.

Thanks for any insight.

andmik

[jaemmons]

The participant doesn't decide if administrative or processing fees are to be charged to their account. The plan document dictates whether or not expenses incurred in connection with the plan are to be paid for out of plan assets or charged to the employer. Ultimately, it is the plan administrator's decision which is put in writing in the plan document.

Although the amount of the expense is relatively small, it seems to me that it is an assignment of the participant's assets for an unnecessary and personal (not plan) fee associated with their plan account which must either be paid for by the plan sponsor or absorbed by the participant and paid out of their own pocket.