Rules for transfer of excess assets to health plans
Article Abstract:
A procedure for petitioning determination letters pertaining to the effect of the transfer of excess assets from a defined benefit plan to a health benefits accounts on the status of the plan is provided in Revenue Procedure 92-24, IRB 1992-13, 22. Section 420 specifically provides allowances for the transfer of excess assets from a defined benefit plan to a Section 401(h) health benefits account so as to provide benefits to retired workers, and their spouses and dependents who are included in the plan. A cover letter to the determination letter is an essential aspect of Section 420 compliance, such that the cover letter must specify if the request being made is based entirely on Section 420 or together with Section 401(a). Provisions that must be considered in the plan document are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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Transfer of notes to qualified plan was prohibited (Compensation and Qualified Plans)
Article Abstract:
Satisfying a minimum funding obligation by transferring third-party promissory notes to a qualified plan has been labeled a prohibited transaction by the Fourth Circuit. The court contradicted earlier opinions of two other courts which have heard the case, namely the Fifth Circuit and the Tax Court. The Fourth Circuit's conclusion called for broad interpretation of prohibitive provisions and moved toward protecting the retirement security of qualified plans. The court also ruled that the transfer of notes to the qualified plan was covered by Section 4975 and thus, subject to the 5% excise tax, since the transfer can be considered a sale or exchange conducted by a 'disqualified person.'
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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SLOB regulations are made final
Article Abstract:
Final Regulations have been issued for companies that wish to establish qualified retirement plan structures across separate lines of business (SLOB). The Regulations, issued under Section 414(r) of the Internal Revenue Code, permit employers to construct different retirement benefit structures for employees in SLOB units. The Regulations specify that each SLOB must meet tests for minimum coverage and participation. The Regulations also state that nondiscrimination tests be applied for the entire company, rather than the SLOB unit alone.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1992
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