Employer's trustee reimbursements for administrative expenses deemed plan contributions.

The IRS had ruled in Letter Ruling 8940014 that employer reimbursements to trustees of the employer's qualified plan for administrative expenses incurred in connection with the maintenance of the trust were deductible under Sec. 162 or 212 and were not deemed to be contributions to the plan for purposes of Secs. 404 and 415. The Service also ruled that the employer's direct payments to service providers for the plan's administrative expenses were deductible under Sec. 162 or 212 and were not deemed plan contributions.

However, in Letter Ruling 9124037, the IRS has revoked Letter Ruling 8940014, as it related to the reimbursement to trustees for administrative expenses, stating only that "[w]e now believe that the first ruling issued in Letter Ruling 8940014 is not in accord with the proper interpretation of the Code and, therefore, we are revoking that ruling." No further analysis was given.

Based on Letter Ruling 9124037, it now appears that an employer's reimbursement of plan administrative expenses will be deemed a plan contribution, subject to the Sec. 415 limits and deductible only within the limits of Sec. 404. The second ruling of Letter Ruling 8940014, that the employer's direct payments to service providers for administrative expenses are deductible under Sec. 162 or 212 and are not deemed plan contributions, was not changed.