Some expense limitation agreements may provide that expenses incurred in excess of the limitation will be carried over to a future period and reimbursed when, and to the extent that, the total expense ratio of the fund falls below a maximum permitted by the prospectus or offering memorandum. Such agreements may also provide that reimbursement is not required after a specified date or upon conclusion of a specified period from initially incurring the expenses, such as three years. ASC 946-20-25-4 stipulates that a liability for such excess expenses should only be recorded when, and to the extent that, all substantive criteria for reimbursement of the expenses have been met. The existence of reimbursement agreements and the carryover amount, if material, should be disclosed in the notes to the financial statements in accordance with ASC 946-20-50-6. If, however, the established criteria for repayment and the attendant circumstances meet the criteria in ASC 450-20-25-2, a liability should be recorded immediately.

In October 2003, the SEC Division of Investment Management staff indicated to the AICPA Investment Companies Expert Panel that they had identified several "excess expense" plans they considered abusive under both the accounting specified by the Audit Guide and the Investment Company Act of 1940. Principal failings included a reimbursement period far longer than was considered necessary for a fund to establish its viability, and under which the time period to recapture expenses did not begin until the first reimbursement was paid. Accordingly, both the terms and actual operation of any such plan should be evaluated carefully to determine that the plan is consistent with GAAP and that there is a realistic probability that the adviser may be permanently unable to recapture some or all of the expenses originally foregone. Further, the SEC expects any fund that has waived fees or reimbursed expenses to make an explicit statement in the footnotes as to whether or not an agreement exists to recapture those amounts in a subsequent period and, if so, to disclose the agreement’s significant terms and expiration dates, together with the cumulative amounts due under the agreement. The SEC may also request that the financial statements include a separate explanation of any amounts to be recaptured in a period exceeding three years.

The staff indicated that it is possible the Division may ultimately determine that any "excess expense" agreement represents a shifting of costs in violation of the 1940 Act and prohibit them entirely.

In 2009, as the Federal Reserve cut interest rates to unprecedented levels to combat the ongoing "credit crunch," a relatively large number of money market funds (especially US Treasury money funds) had to waive management fees and/or reimburse expenses to maintain positive, or even zero, yields. In some (but not all) of these situations, the fund sponsors established arrangements permitting the sponsor to recoup the amounts waived or reimbursed at a later date; there have been a number of questions about whether these agreements are effective as "waivers" under GAAP, or are merely payment deferrals which would not provide support to distribution yields. Answering this question is very facts-and-circumstances dependent. Refer to Advisory 2009-12 for more information.