401K Third Party Administrator Fee

[BrianMc]

All,

We are transferring my wife's former 401K into the Thrift Savings Plan (TSP). For background, my wife is a nurse and during the past several years, has worked for nurse staffing agencies. We've transferred previous 401Ks into her TSP and minus the paperwork drill, experienced no issues. Today, we were informed there would be a $50 "Third Party Administrator (TPA) Withdrawal Fee." Has anyone heard of such a fee? Seems to me it's yet another way to gouge the "little guy" of more money. Any idea?

Thank you.

Brian Mc

[tfb]

The TPA has to work on the distribution: close account, cut a check, issue 1099, ... Seems reasonable to me.

[BrianMc]

Any idea why the fund company doesn't do that?

[dm200]

The TPA has to work on the distribution: close account, cut a check, issue 1099, ... Seems reasonable to me.

Doesn't seem reasonable to me. It is YOUR money and they should not charge you to transfer YOUR money. Should be a cost of doing business.

[steelerfan]

From my understanding, this is not an uncommon practice.

And welcome to the TSP - one of the best run "401(k)"!

[tfb]

The TPA has to work on the distribution: close account, cut a check, issue 1099, ... Seems reasonable to me.

Doesn't seem reasonable to me. It is YOUR money and they should not charge you to transfer YOUR money. Should be a cost of doing business.

TPAs are fee for service. they quote for each service: processing payroll, compliance, loans, distribution, etc. if this is rolled into an annual fee, basically every participant will pay it. why should current participants pay for work incurred by someone who is leaving?

[dm200]

The TPA has to work on the distribution: close account, cut a check, issue 1099, ... Seems reasonable to me.

Doesn't seem reasonable to me. It is YOUR money and they should not charge you to transfer YOUR money. Should be a cost of doing business.

TPAs are fee for service. they quote for each service: processing payroll, compliance, loans, distribution, etc. if this is rolled into an annual fee, basically every participant will pay it. why should current participants pay for work incurred by someone who is leaving?

What and how charges are incurred and paid for is dependent on the contract between the TPA and the employer. Carried to an extreme, this would "justify" charging each participant a small fee per payroll deduction (regardless of amount), fees for statements sent, fees for calls inquiring about status, etc.

[tfb]

What and how charges are incurred and paid for is dependent on the contract between the TPA and the employer. Carried to an extreme, this would "justify" charging each participant a small fee per payroll deduction (regardless of amount), fees for statements sent, fees for calls inquiring about status, etc.

And what's wrong with that? If one participant calls 100 times and another doesn't, it's fair to charge the one who calls. Many TPAs charge per-participant flat fee to cover processing payroll and printing/mailing statements.