Base fee
A fixed annual administration fee that covers plan-level work such as testing, filings, and consulting time.
WORKFLOW LIBRARY · PRACTICE MANAGEMENT
TPA fee schedule and billing, from proposal to collection.
How a third-party administrator builds a fee schedule from base, per-participant, and asset-based components, turns it into a proposal, invoices plan sponsors each quarter, and keeps collections and overdue balances under control.
WHY THIS STAGE MATTERS
Billing is where plan data meets the firm's revenue.
Independent TPAs often price work carefully and then lose margin in billing: invoices built by hand from out-of-date participant counts, quarterly runs that slip by weeks, and overdue balances nobody follows up until year end. Billing is also where plan sponsors see the TPA's precision most directly. An invoice with the wrong participant count undermines confidence in the rest of the service.
There is a compliance angle as well. Plan fees are subject to fee disclosure requirements, and fees paid from plan assets must be reasonable and for services the plan actually receives. A fee schedule that is documented, applied consistently, and traceable to plan data makes those conversations with sponsors and their advisors much easier.
Per-participant fee
A monthly or annual charge per participant that scales with recordkeeping, distribution, and service volume.
Asset-based fee
A charge in basis points on plan assets. One basis point is 0.01%, so 5 bps on $5 million is $2,500 a year.
STEP-BY-STEP PROCESS
Six steps from fee schedule to cash collected.
Define the fee schedule components
Decide which components apply to which plan types and how each is measured. For per-participant fees, define who counts: active participants only, or everyone with a balance. For asset-based fees, define the asset figure and when it is measured. Write these definitions down; they will be questioned later.
Price the prospect from real data
Use the prospect's participant count and plan assets, not round guesses. An illustrative example: a $1,500 base fee, plus $8.50 per participant per month for 60 participants ($6,120 a year), plus 5 bps on $5 million in assets ($2,500) comes to $10,120 a year, or $2,530 a quarter. Seeing each component separately helps you explain the price.
Draft and issue the proposal
Turn the calculation into a proposal draft that lists each fee component, the assumptions behind it, what services are included, and what is billed separately. Track each proposal until it is accepted or declined, along with the annual fees it represents.
Set up billing for the new client
Once accepted, record the agreed schedule against the sponsor and plan. Decide whether each invoice covers a single plan or all of a sponsor's plans, and how the sponsor will pay: ACH auto-debit or check.
Generate quarterly invoices
Run invoices for all clients on the same schedule each quarter, using current participant and asset figures. Review drafts before sending; a quick scan for large swings against last quarter catches most data errors.
Record payments and follow up on overdue invoices
Mark invoices paid as ACH debits clear or checks arrive. Review overdue invoices weekly and contact sponsors early. Void, rather than delete, any invoice issued in error so the numbering and history stay intact.
COMMON EXCEPTIONS
Billing problems and how to handle them.
| Problem | Cause | Handling |
|---|---|---|
| Sponsor disputes participant count | Different definitions of who counts | Point to the definition in the fee agreement and the census figure used. Agree any change in writing. |
| Invoice issued in error | Wrong plan, duplicate, or wrong amount | Void the invoice and issue a corrected one. Keep both on record. |
| Failed ACH debit | Account change or insufficient funds | Contact the sponsor, confirm bank details, and retry or switch to check. |
| Invoice overdue | Sponsor contact changed, or invoice not received | Confirm the billing contact, resend, and log the follow-up on the sponsor record. |
| Proposal with no response | Prospect stalled or chose another provider | Follow up on a set schedule and close out proposals that go quiet. |
If fees are deducted from plan assets rather than paid by the sponsor, the deduction is a ledger transaction too. Make sure billing and the trust ledger reconciliation agree.
CONTROLS AND EVIDENCE
Keep billing clean and explainable.
Controls
- Written fee schedule definitions for each component
- Invoice figures drawn from current plan data
- Draft review before quarterly invoices are sent
- Void instead of delete, with a reason
- Weekly overdue review with a named owner
Evidence to retain
- Signed fee agreement and accepted proposal
- Participant and asset figures used on each invoice
- Payment method and date for each payment
- Notes of collection follow-ups
- Fee disclosure documents provided to the sponsor
IN THE PILOT BUILD
How the KinetiPlan pilot build supports this.
The Billing & Proposals area in the pilot build covers pricing new business, issuing proposals, invoicing plan sponsors, and tracking fee collections. All figures are synthetic demo data.
- An interactive TPA fee schedule calculator with base administration fee, per-participant monthly fee, estimated participants, asset-based fee in bps, and estimated plan assets. It can prefill from an existing sponsor or price a new prospect.
- The calculated total shows the base, per-participant, and asset-based amounts separately, plus an approximate quarterly figure, with a Generate Proposal Draft action.
- A fee collection summary showing year-to-date collections, the share of billed fees collected, ACH auto-debit and check payments, pending invoices, overdue invoices, and proposals awaiting response.
- An invoice list with New Invoice and Generate Quarterly Invoices actions, filters by status (Draft, Sent, Paid, Overdue, Void) and sponsor, and Mark Paid and Void actions. Invoices can cover one plan or all of a sponsor's plans.
- Each sponsor page lists its invoices, and sponsor notes can record collection follow-ups.
The pilot build does not process payments; it records them. See the screens on the pilot build tour.
FAQ
Common questions
What goes into a typical TPA fee schedule?
Most schedules combine a fixed annual base fee for plan-level work, a per-participant fee that scales with service volume, and sometimes an asset-based fee in basis points. Many firms also list separate charges for services outside the standard scope.
How do I calculate an asset-based fee in basis points?
One basis point is 0.01%. Multiply plan assets by the number of basis points and divide by 10,000. For example, 5 bps on $5,000,000 is $2,500 a year.
Should I delete an invoice issued in error?
No. Void it and issue a corrected invoice. Voiding keeps the invoice number sequence and the history intact, which matters if a sponsor or auditor later asks about the charge.
Does the KinetiPlan pilot build collect payments?
No. The pilot build records ACH auto-debit and check payments against invoices and tracks overdue balances, but it does not move money.
This guide is general educational information about retirement plan operations, not legal, tax, or investment advice. Confirm current IRS and DOL rules and the terms of each plan document before acting.
SEE IT ON YOUR OWN WORKFLOW
Walk through billing in the pilot build.
We will price a prospect, draft a proposal, generate quarterly invoices, and show how collections and overdue balances are tracked.