Administration fees

[Guest LBH]

What are the rules in deducting plan admin fees directly from plan particpants accounts? A client previously paid the fees directly to the TPA but recently switched investments to an insurance company in which the insurance company offered to deduct the fees directly from the accounts.

[Dowist]

Administration fees can be paid from plan assets - generally the fees are asset-based, although some will be transaction-based - such as uniform per participant account fees, loan fees, check fees.

The fiduciary who selects a TPA or insurance company or whomever to do the administration has a fiduciary responsibility to make sure fees are reasonable - if fees are excessive I think the pts have a right to sue (or practically speaking at least to complain loudly).

The Department of Labor has recently published a number of communiques on fees, although there is currently nothing that requires that fees be disclosed to participants - except perhaps the transaction fees. The DOL has also published a uniform fee disclosure form which is helpful in indentifying fees. See the DOL PWBA website.

[Guest klc]

You do need to be sure your plan document allows for administrative fees to be charged to the participants.