Distribution Fees charged to HCE for ADP Refund

[Guest KAGrist]

We have a plan that charges distribution fees directly to the participant.

They are failing ADP this year and require refunds to correct.

Has there been any guidance on whether it is allowable to charge a distribution fee on a corrective distribution?

If allowable, would you "gross-up" the refund amount by the distribution fee so the HCE is getting the full refund, or net the distribution fee against the total refund amount?

Thanks.

[JanetM]

I would suggest the Plan Sponsor pay the fee.

[david rigby]

Seems difficult to claim that the participant requested this payment, especially since the original post implies that the corrective distribution is required by the plan.