Discussion Posts

    • Legal fees paid pre-tax from a qualified plan?

      • Posted by no bd for me
      • on August 18, 2008 3:01 PM EDT

      I have a client that has a profit-sharing account.  He had a VUL product inside the PS account.  He sued (and subsequently lost) the person who got him into the VUL.  He paid legal fees of approximately $50K and ideally I would like him to be able to get those fees out of the qualified plan on a tax-free basis. 

      He paid the legal fees personally, but I'm wondering if he can't be reimbursed for those.  I know investment management fees come out without tax consequences and I'm hoping the legal fees can come out too.  Anyone have any guidance on this besides getting a private letter ruling?