Can the employer/plan sponsor pay the asset management charges and get

[Guest William Lehman]

I have a plan where the employer would like to pay the asset management fee/contract charge. The plan is self-directed and wrapped in a group annuity package. Can the employer pay this expense and get a deduction?

Reg 1.404(a)-3(d) seems to indicate these are not deductible.

[Guest Carol Ringwald]

From my research on this the employer can pay the expense and get a deduction. They key is that he CANNOT reimburse the plan for the fees. Therefore, the insurance company issuing the annuity contract would have to be willing to allow these fees to be paid outside of the contract. Having worked for a large insurance company for 15 years in this area, I think it will be very difficult to get them to agree to allow this.

Also, many of the asset management fees are included as a part of the unit value calculation for the investments in the contract and therefore, there is no direct deduction of the fees from the assets in the plan...it is just reflected in the pricing.