Charging Admin Fee

[J Simmons]

Health plan (flex accounts and HRAs) is administered primarily through employer's own IT system. Not all employees agree to and give e-mail for electronic delivery of summaries, notices, etc.

TPA would charge $8.50/mo to administer the accounts of employees that do not agree to electronic delivery.

May plan specify the $8.50/mo administration charge applies to all accounts, but is waived as to those that agree to and provide e-mail for electronic delivery of summaries, notices, etc.?

[Guest Sieve]

I don't know the answer, but consider these points . . .

To the extent the IRS regs on electronic notices and elections come into play--and they do apply to cafeteria plans and health plans (which would include a flex plan & HRA--see Treas. Reg. Section 1.401(a)-21(a)(2)(ii))--then the individual agreeing to receive notices & elections electronically must be advised that he/she can request, and receive, a free paper copy of the notice or election. (Treas. Reg. Section 1.401(a)-21©(3).) That means, in your situation, that a person receiving the notices electronically--without charge--also can receive a free hard copy of each notice, but the person being charged a monthly fee for hard copies gets the same documents only if they pay for them on a monthly basis. Something very strange about that result.

The DOL regs re: providing documents electronically do permit a charge for hard copies (DOL Reg. Section 2520.104b-1©(2)(ii)©(4)). But, there is an old, old reg. which limits the charges that can be made to provide certain documents (no more than $0.25/page) and requires that other documents be provided free of charge. (DOL Reg. Section 2520.104-30.) (It appears that this copying charge is the only charge that can be made for "furnishing" the documents.) How does this reg. fit into your $8.50/mo. administrative charge for providing hard copies of documents?

Or, is your fee really for providing administrative services (rather than providing documents)? In that case, everyone should be charged--or no one should be charged--for those administrative services. Does that then mean that communicating the results of the administrative services via hard copy ought then to be subject to the DOL rules on charges?

[J Simmons]

Thanks, Larry. That's another one I owe you.

[Guest Sieve]

But I didn't even come close to answering your question. Besides, I owe you for the 403(b) info--but, then, who's counting?

[LRDG]

I'm not sure what EEs don't agree to or what it has to do with TPA fees or waiver of fees.

That said, as a practical matter, an annual election of $400 would save $100.00, (assuming 25% withholding tax), at a cost of $102.00 annually to the participant.

Stating the obvious, but it's doesn't appear worth the effort for the participant.