Exclusive Benefit Rule

[Guest TroyRiley]

The exclusive benefit rule mandates that, for qualified plans, no part of the corpus or income of the trust be diverted for any purpose, other than for the exclusive benefit of the participants and beneficiaries.

Here is my question:

If we cash out an account and a small contribution in an amount less than $1 comes in after the cash out, are we required to spend $5 to send another check, or can we write off these de minimus accounts? What if we have 100 participant accounts less than $1, and it would cost us $10,000 to mail all of the checks?

Thanks in advance.

Troy Riley

[wmyer]

Have you considered charging a small account fee of $x per year?

[WDIK]

What if we have 100 participant accounts...and it would cost us $10,000 to mail all of the checks?

Are the costs to mail a check really $100?

(Sorry to duplicate the responses of Blinky and RButler made in a "sister-thread." At the time I posted, I was unaware that a duplicate existed.)