Distribution fees paid by participants

[ljr]

Is anyone aware of specific IRS language covering this? My thinking is the distribution fee should come "off the top:"

For example:

Vested Benefit is $10,000 and participant elects to roll to an IRA, the IRA received $9,970 (the distribution fee is $30) and a distributable amount of $9,970 is reported on the 1099-R. If a cash distribution is taken, the gross amount would be $9,970, 20% would be withheld, and the balance paid to the participant.

Thoughts? What are YOU doing?