Income to plan as a result of Revenue Sharing Agreement

[katieinny]

This seems pretty straightforward to me, but I would feel better getting confirmation from others in the industry. A plan has been getting income as a result of a Revenue Sharing Agreement with their TPA. They have set up a separate account to receive the income and have used the account to pay administrative expenses. However, the assets now exceed the amount of the expenses, so I'm thinking they should simply allocate whatever's left over to plan participants, probably on a per capita basis. They should probably do that at the end of every year. Sound reasonable?

[Bird]

I think it's common, and ok, to allocate the money, but probably on a pro rata (to assets) basis, since that's how it was probably collected (i.e. not per capita).

[katieinny]

Bird: I see your point. I will suggest that they allocate any remaining assets on a pro-rata basis at the end of every year. Thanks for your input.