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expenses directly to a third party from the employer's assets,
and if such expenses are not provided for by contributions under
the plan, those payments will not be deemed constructive
contributions to the plan subject to section 404 limitations but
rather are expenses deductible under section 162. This
interpretation is in harmony with the statute, the purpose of
which is to limit deductions for contributions. This
interpretation is supported by respondent's suggested definition
of "contribution" and by respondent's proffered rationale behind
the regulation:
The intention of Treas. Reg. � 1.404(a)-3(d) was to
provide employers with two alternative ways of meeting
the ordinary and necessary expenses of administering
pension plans for their employees. The employer can
either pay these costs to the plan trustee in the form
of additional plan contributions, and leave to the plan
trustee the responsibility for paying the incurred
expenses, or the employer may pay these expenses out of
general assets of the employer and deduct them under
I.R.C. � 162 to the extent they are ordinary and
necessary.
Payments by an employer to a third party for ordinary and
necessary plan expenses fall outside the definition of
"contribution" only if the expenses are "not provided for by
contributions under the plan".9 See sec. 1.404(a)-3(d), Income
9This makes sense, for example, in the case of a defined
benefit plan where plan expenses provided for by the plan are
variables accounted for in the actuarial process. See sec.
1.404(a)-3(b), Income Tax Regs; Perdue, Qualified Pension and
Profit-Sharing Plan par. 13.06 (2d ed. 1998). In such cases
where the allowed contribution is increased to account for
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