IRS rules on whether plan provisions on transfers or direct rollovers from money purchase plan to profit-sharing plan disqualify profit-sharing plan
Article Abstract:
The IRS ruled that direct rollover from a money purchase plan to a profit sharing plan would not disqualify the profit-sharing plan but that a spin-off from a money purchase plan to a profit-sharing plan would disqualify the new plan if the profit-sharing plan allowed employees an elective discretionary distribution benefit. Distribution should be an option on the termination of the old plan to allow employees to rollover funds into the new plan, but providing the opportunity to rollover to a plan that allows discretionary distributions is contrary to qualification rules.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1995
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IRS proposes relief from disqualification for plans accepting rollovers from non-qualified plans
Article Abstract:
The IRS has enacted final regulations under IRC section 401(a)(31) that identify the relief available to plans that accept direct rollovers from other plans that are subsequently found to be disqualified. If the administrator believes the rollover to be qualified and then finds out that it is not, the administrator can correct the problem by distributing the funds and any income attributable to the contribution to the participant. By making the corrective distribution, the administrator's plan will not be at risk of disqualification.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1996
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Proposed regulations formalize IRS position that employers cannot be grantors of secular trusts
Article Abstract:
Proposed regulations under IRC section 671 state that employers cannot be treated for tax purposes as the owner of a secular trust, as defined under IRC section 402(b). The IRS has stated in private letter rulings that employer deductions for non-qualified trusts are fundamentally inconsistent with the grantor trust rules. Employers favor secular trusts because of the accelerated deductions available for contributions made.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1996
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