Distribution Fee on Form 5500 and Management Fees

[Vlad401k]

1) Let's say a participant takes a distribution from a plan. His account balance is $1,000 and the TPA firm charges $50 for processing the distribution. I would assume that $950 should be listed as "Benefits Paid" (since that will be the 1099-R amount) and the $50 should be listed under "Administrative service providers" section. Do you agree?

2) Also, let's say the plan does its Form 5500 on accrual basis. At the end of the year, one of the participant's account balance is $1,000. However, for the fourth and final quarter of that year, he is due to pay a management fee of $5. That fee is not pulled from his account until the first week of the following year. Should the ending balance on Form 5500 that's attributable to this participant reflect that $5 fee (with the $5 fee listed under "Administrative service providers")?

[mphs77]

1. I agree

2. Many firms look at an "accrual basis" reconciliation of the Plan's assets to be a bit of a one way street. Any money owed to the trust will be shown as a receivable but any fees or distribution in process at the end of the year will not be shown as a payable. It really depends on if you want to show the fee as a payable. My personal belief is that it should be a payable and thus reflected on the 5500.

[Bird]

1. Agree

2. I cannot begin to imagine accruing fees like that.