Distribution Fees

[Guest lvisco]

Is there any guidance as to the amount of distribution fees? Currently we charge $75 for all distributions, and are having a hard time agreeing on a non-discriminatory amount to charge participants with small balances of around $75. Does not seem fair to wipe out their entire balance - especially if it is all 401k - but also does not seem fair to charge the participant with a $100 balance and not the one with a $74 balance. What is the average amount charged for distribution fees by other TPA's? Does anyone use a percentage up to a certain amount? This is one of the methods we are now considering.

[GMK]

Here's a previous discussion of this topic:

http://benefitslink.com/boards/index.php?showtopic=42566

For plain ol' distributions, I (a plan administrator) expect a small, fixed (keep it simple) fee to cover administrative costs. From a PR perspective, participants should feel good about receiving their benefits, and not disgruntled by what they, rightly or wrongly, might feel are unjustifiably high fees. Basically, I'm suggesting that you cover your distribution costs but make your profits somewhere else.

Fees for loans would probably be higher when justified by additional administrative work.

edit: typo