This probably has an obvious answer, but I had to ask: Client wants to have a loan feature in his 401k plan. He understands that there will be a small fee that the loan participant will incur and must pay, to the TPA. Client's question is, can he (the owner/employer) also charge a nominal fee for his aggravation involved in approving the loan? He is talking in the $30 - $40 range, not much at all. Also, could this be paid to the employer?

Obvious answer - amend the plan to remove the loan provision

For aggravation? No. For the cost of services that the employer can specifically quantify? Possibly. See Labor Regulation 2550.408b-2. But I think that exemption is rarely used, except in the case of multiemployer plans.