Terminating db plan has $80000 in excess assets. Plan sponsor wants to first pay actuary's/attorney's fees out of excess, then re-allocate the rest to the plan parts. Plan's atty says IRS has reservations about paying fees out of excess assets. I thought that only applied if the sponsor was reducing a reversion, and therefore the excise tax, by paying the fees from the assets. Is the atty correct?

If the document allows fees to be paid from plan assets, I don't see a problem.

I agree with you that, once the fees are paid and the balance reallocated, there were no "excess assets".