Plan Sponsor Quick Tips: Reviewing a Plan Invoice

Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.

If you are a 401k plan sponsor or administrator, chances are, you receive periodic invoices from your service provider. Yes, that time comes around every now and again—when checks need to be written in order to maintain the qualified status of your plan. Don’t immediately panic, perhaps there are a few things you could do to make this task beneficial:

Pay Out Terminated Participants – Some service providers will charge for terminated participants with assets in their account, thus it’s wise to get rid of these guys if they won’t be coming back to work for you. A good place to start would be with the participants with less than a $1,000 in their account. Keep in mind that this could affect your compliance testing and fee schedules, and in some cases overall plan assets affect your fees as well.
Invoice Review – It’s always a good idea to double check the figures on your service providers’ invoice. Just because they charged you for 3 distributions doesn’t mean they are always correct. Errors do happen sometimes. Compare any activity based fee on your invoice with a plan statement for the same time period. After all it is your fiduciary duty to act in such a manner.
Forfeiture Accounts – Forfeiture accounts are the non-vested portion of a participants’ account, and your plan could have some of these funds. Check your document to see if you can use forfeiture funds to pay for plans expenses. If that is the case then you won’t have to write a check this time around and will be following the rules of you plan document.

In my humble opinion, a good service provider will have already notified you of all these items, but if they haven’t then I’m sure you will now know to ask about it! The good thing is you did your part and as you send in your hard earned money it will be for a good cause – maintaining a retirement plan for your employees! As always, your service provider is the best place to get information about your plan hence make sure you consult with them before you take any action!

This site is for entertainment purposes only. 401kBasics and it’s authors are not financial advisors and no information found on this site should be construed as financial advice.

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