2009 Sch. I - Adminstrative Fees

[401king]

I have tried to find more clarification on this, but had no luck.

I understand that the 2009 Sch. I now has a line item for administrative expenses; does this mean only expenses paid by the plan (i.e. distribution fees, loan fees, pro-rata fees administration fees paid by participant)? Or does it mean the full administration cost of the plan?

[pmacduff]

I don't have a cite for you but we were told at that ASPPA conference that it is only fees paid by the Plan/ from plan assets.

[MSN]

If not paid by the plan, why would it be relevent for reporting purposes? It would not have ever been plan assets.

[pmacduff]

MSN...at the ASPPA conference I sat in a Sch C seminar (as I have a number of large plans which require the annual audit and "long form" 5500). In those instances and from what I could gather from the speaker, ALL fees are reportable on Schedule C for the large plans (over 100 count), even those paid by the Employer. I believe the idea there is for the form to reflect an overall picture of the total plan fees. While I realize this does not apply to the Sch I filer, I'm thinking that with all the focus on fee disclosure these days it may eventually affect small plans as well.

[MSN]

The Schedule I was never intended to be a check for total plan fees as the Schedule C is now. The OP was referencing a filing for a small plan filer, so no Schedule C would be required, as you note. I agree that had the OP had a large plan, both direct and indirect compensation become reportable on the Schedule C.

I hope the same level of disclosure does eventually filter down to small plans.

[BeanCounterBlues]

A recent webcast speaker stated that Sch I is only intended to report fees paid from plan assets (repeated above I realize). My understanding of fees that are already reported on Sch A (like broker commission) do not have to be repeated on Sch I. Is that accurate?

What about a TPA who charges transaction such as loan processing fees against the assets - which is also reported on Sch A. I hear some camps say that type of fee s/ then be repeated on Sch I, but not the commission to the broker. And others who disagree.

Anyone know or have heard comments of how DOL wants this handled where w/ small plan filing Sch I, the Sch A reported items are to be reported or not reported again on Sch I? Am getting a lot of questions on this - not from the standpoint of being concerned about reporting it 2X, but from the standpoint of reporting items the way the DOL wishes (the latter being the goal).

[WDIK]

You should report it on the Schedule I if it decreases the plan assets, if not, then don't.

[BeanCounterBlues]

I don't disagree but then why are commissions paid to agents and reported on Sch A exempt from Sch I reporting? The commissions do decrease the assets in the plans I work w/ but my understanding is that commissions to agents are nevertheless not Sch I reportable. Why not? And why no guidance on the TPA fees I describe? Those are probably all rhetorical questions.

[WDIK]

The commissions do decrease the assets in the plans I work w/

Please clarify.

[BeanCounterBlues]

Hi WDIK

John Hancock 401k plan. Earnings are decreased by X basis points, which are paid by John Hancock to the commissioned agent for his / her services. Plan sponsor does not pay these fees, they are removed from the plan's assets by way of decreasing the posted earnings. Say my total earnings are $50. The commission is $0.50. JH will report on my account statement that I earned $49.50. They'll send $0.50 to the agent. $0.50 goes on Sch A on the 5500.

TPA transaction fee also reduces the assets, but as separate line item (eg not "hidden" by running it through earnings).

Both fee types reduce the assets. I have heard that repeatedly in seminars that if it's on Sch A then it does not go on Sch I - but always w/ a reference to the "agent commission". I am less clear on the TPA transaction fee. BOTH the commission, and the TPA fee, are reported by JH, on the Sch A. Commentators have stated in seminars that "they think" the TPA fee would be reported on Sch I and Sch A but there doesn't seem to be clear DOL guidance on this matter. I am just curious as to how others think this situation s/b handled. Report the TPA fee on Sch I or not?

Again the goal is accurate reporting to DOL.

Hope this is more clear, thanks.

[WDIK]

From my perspective, the "fees" you are concerned about are reducing potential earnings, not earnings actually credited to the trust account.

Along with the Schedule A information, John Hancock also provides a Balance Sheet and Income Statement which shows actual earnings and expenses to use in preparing the Schedule I.