Employer reimbursement of expenses

[Guest Phil L]

In 1991, the IRS issued several private letter rulings pertaining to employer reimbursements of expenses that had been previously been paid from trust assets. In addition to reversing its previous position on the matter, the IRS ruled in PLR 91241034, 9124035, and 9124037 that reimbursement of brokerage fees and investment management fees would NOT be a deductible expense under Code Sec. 162 or Code Sec. 212. In addition, the expense reimbursements would be treated as "employer contributions" for purposes of calculating the 404 deductible contributions limit and they would also count as "employer contributions" for 415 testing.

I have two questions. First, the rulings seem to apply only to investment related expenses. Could the employer reimburse the trust for onging administrative expenses (not investment related expenses) without treating the amounts as employer contributions for IRC Sections 404 and 415?

Second, is anyone aware of any clarifications on this matter since these PLRs were issued back in 1991? Thanks for your help.

[Guest ESOPwizard]

Avoid the issue. Have the third party service providers bill the sponsor directly.

[Guest Phil L]

Too late. The expenses have already been deducted. I would like to verify the proper treatment so I can add value to the sponsoring employer instead of simply sliding the problem to another party.

[Guest Boilerburm]

Here is an old thread that came up when I was searching through the Boards, and this is a question that came up in my office recently. Can the employer reimburse the trust without treating the amount as an employer contribution for 404 and 415? Any references would be greatly appreciated.

[Guest yukon]

Rev Rul 2002-45 is the only recent stuff I could find. Don't know if it's exactly relevant to this situation or not.