per partiicpant tpa charges

[Draper55]

typically a tpa will charge a flat fee and a per participant charge for 401(k) administrative services.

I am wondering if firms define a participant differently in their pricing...for example would you

ony include people with account balances at year end? what about people that were paid out during the year? what about people with no balance at year end but in the plan eligibility wise? what about people in the plan during the year eligibiity wise but leave with no benefit?

any comments are appreciated...

[BG5150]

I'm sure different firms look at it differently. Indeed, there may be differences in charges for separate clients of the same firm.

I've billed many different ways. You can make a case for each of the models. It's up to the managers to try to hit the revenue sweet spot that covers the work done but does not strike the client as onerous. Whether it's done on a plan level, client level or enterprise level, it's up to the powers that be.

[K2retire]

There is no doubt that practices vary among firms, and sometimes within the firm based on what the client negotiates. As a practical matter, compensation, hours and eligibility must be tracked for all employees, regardless of account balance because they must be included in testing. Account balances of terminated employees must be tracked to determine top heavy status and RMDs. Terminated participants also must receive various notices. The bottom line is that whether or not a fee is charged, all of these participants increase the workload.

[K2]

Unless there is a significant difference between the two, I bill on participants with a balance at the end of the quarter or year, depending on the billing cycle. I don't get any questions when I bill that way. I don't currently have any plans where this is a big difference. The last time I did, I billed on the participant head count. They eventually terminated their plan

[NJ Mike]

We bill on the number of participants but in most of our 401(k) plans, we charge one rate for participants who defer and a lower rate for all others.