IRS treats transfer of employees to successor employer as separation from service for purposes of qualified plan distribution rules

Article Abstract:

The IRS ruled that an employer may make distributions from a qualified plan and obtain separation of service from employees who are discharged from a subsidiary and subsequently transferred to a successor employer. The IRS based its ruling on the fact that the move did not involve an attendant transfer of assets, stocks or liabilities and that the companies involved were neither merged, consolidated nor liquidated. Additionally, the IRS noted that ownership of the involved parties remained unchanged and that their operations remained unrelated.

Employee relocation

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IRS finalizes regulations for eliminating pre-retirement distribution option after age 70 1/2 and includes new plan amendment deadline for union plans

Article Abstract:

IRS final regulations concerning pre-retirement employee qualified plan distributions of options under IRC section 411(d)(6) were issued in June 1998. The regulations were issued in accordance with the Small Business Job Protection Act of 1996's elimination of required distributions to employees when they reach age 70 1/2. Conditions set forth in the three part test of the proposed regulations must be met.

Tax administration and procedure, Tax administration

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Plan distribution made in part of employer securities and cash to an individual and to an IRA is a lump sum distribution

Article Abstract:

This article concerns IRS private letter rulings 199928031 through 199928034 which treat as lump sum distributions from qualified retirement plans, employer distributions of securities and cash partly to individuals and partly to IRAs. The IRS did not consider distributions to IRAs as being fatal. Such treatment is beneficial in allowing nonrecognition of gain on appreciated securities.

United States

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