ok - I know this one has been discussed before, but I still have trouble when I search for things...

Client has a 401(k) PS plan, PS assets are in pooled funds, 401(k) was recently moved to individual accts. Distribution fee is charged to participant prior to payout per plan, some participants have 401(k) assets but no PS balance and some have small PS balances due to forfeiture reallocation.

How do you handle participants with small balances that are less than the distribution fee? Client does not want to pay fee from Company.

Suggestions?

If the balance is less than the fee, they don't get a distribution. Their entire balance is taken as fees.

Vicki

Vicki - thanks for the response.

We (as TPA) don't charge the client if we don't prepare paperwork, so these small vested balances are remaining in the plan and basically forfeiting to all other participants, this doesn't seem right.

I think we will advise the client that all terminees will receive distribution forms; the charge for distribution will be invoiced to the client, and the client can pay the invoice from the Plan assets.

That's certainly an option as well. It's rare nowadays to see clients paying fees that normally are passed on.
Good luck!

Vicki