Hello all,

Some of our clients pay their TPA fees directly (we are the TPA), with the exception of distribution fees. If a participant's vested account balance is $500, and the distribution fee is $100, the participant receives $400 and that is what is reported on their 1099R.

Now, the investment platforms don't typically break out that $100 in their annual reports. In the foregoing situation, they would show a distribution of $500.

The question is whether the $100 fee is a plan expense or a participant expense. I feel that because the participant never sees the money, nor does the taxable amount include the $100, it is really a plan expense and should be reported as such on the Schedule I.

Does anyone feel that this doesn't need to be reflected as a plan expense? All points of view welcome!

Also posting this on 5500 board.

Medusa