Participant-Paid Distribution Fee

[Doghouse]

We are a TPA. Client has their plan set up so that each participant pays the distribution fee related to his own distribution. So far, so good. The platform allows for that. The issue is that the platform wires the fee amount to our bank, who upon receipt deducts a $15 wire transfer fee. It has been proposed that we gross up the distribution fee charged to the participant by the $15 wire transfer fee. I am less than comfortable with that, since it doesn't directly relate to the processing of the distribution itself - at least in my mind.

Any thoughts? It would seem to me that we either eat that fee, or it can be charged to the client or plan, but not to the participant.

[mbozek]

We are a TPA. Client has their plan set up so that each participant pays the distribution fee related to his own distribution. So far, so good. The platform allows for that. The issue is that the platform wires the fee amount to our bank, who upon receipt deducts a $15 wire transfer fee. It has been proposed that we gross up the distribution fee charged to the participant by the $15 wire transfer fee. I am less than comfortable with that, since it doesn't directly relate to the processing of the distribution itself - at least in my mind.

Any thoughts? It would seem to me that we either eat that fee, or it can be charged to the client or plan, but not to the participant.

How much does it cost to mail a check or make payment through pay pal? You are correct that there is no connection between the plan distribution and wire fees to you as being an adm cost of the plan administration that justifies charging participant $15 since the wire fee benefits you, not the participant. How you choose to receive your payment is a cost that you should absorb.

I dont see why the plan should pay the fee because it is not a plan expense but is a cost of your doing business.

[Doghouse]

Thanks, we're on the same page. Seemingly this particular vendor, with whom we only have one or two plans, does not allow any options in this regard. PayPal would be a beautiful thing but I don't see it happening. This vendor would be far too sophisticated for that