Plan Fees - TPA Acting as Transfer Agent only

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Facts:

Assume that 401k plan's annual fees paid by the plan assets are $10. $2.50 is the TPA's fee and $7.50 is the IQPA fee paid to the auditor. The plan document permits fees to be paid from plan assets and the plan fidcudiaries believe these are reasonable (amounts hypothetical) fees for the services rendered.

In reality the fees are of course larger but I don't want to state the fee amount in a public forum.

Assume that a new investment carrier can only handle paying one service provider from the assets. Assume that the investment provider will cut one check and one check only for fees (not negotiable). Assume that the plan sponsor wishes to stay w/ this investment carrier (eg I'm not looking for the suggestion of "find a carrier that can accoommodate you.").

How the TPA proposes to handle the situation:

TPA proposes to set up a "trust account" so-to-speak to house the check from the carrier. This account is in the FEIN# of the TPA (eg when I say "trust" account I don't mean the 401k plan trust). TPA will then forward $7.50 auditor's portion of the check to the auditor. TPA acts only as a paying agent. TPA will then transfer the TPA's portion to the TPA's general checking account as "fees earned" (kind of like how a lawyer handles IOLTA account).

However due to the limitation of the carrier that they will only cut one check, the Schedule A produced by the carrier will reflect that 100% of the payment went to the TPA.

The TPA will prepare the Form 5500 for the client to give to the auditor for the audit. The TPA will present Schedule A showing BOTH service providers and the amount each actually ends up w/. If Sch C reporting is necessary the same position will be taken on Sch C.

The TPA will keep a paper trail of the transaction and will never put the auditor's funds into the TPA's general checking account.

Question:

Does anyone out there do this and is it common practice? Are there any pitfalls to the TPA of doing this? Are there any problems w/ the TPA's proposed method of handling the transactions as outlined above (especially "re configuring" Sch A data as presented by the carrier)?

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Thank you for any assistance!