We have a money purchase plan funded with an insurance company annuity. Each year the fund withdraws for contingency and expense charges. The charges are shown as expenses to the trust on the Schedule A. The client wants to reimburse the plan for these expenses.

This is a small 3 life case, the contribution is around $25,000 per year. If the contincency fees are $5,000, can the client contribute and deduct $30,000?


Steve

AS I remember, if the fee is included with the premium, the whole thing is counted as part of the plan's deduction and contribution which must comply with 404 and 415. It is okay if the employer pays the fees directly to the insurance company via a second check clearly marked for the expense. Then the fee is deductible.