Qualified plan distributions in corporate acquisitions and mergers

Article Abstract:

Determining whether qualified pension plan distributions are permissible after a corporate merger or acquisition will depend partly on the type of plan: pension, profit-sharing, or one containing a qualified CODA allowing Section 401(k) deferrals. In general, termination of a pension plan and distribution of benefits is permissible at the time of a merger/acquisition. The cost of vesting those recently employed would have to be weighed against that of keeping an existing plan in place. There are detailed rollover and income averaging rules regarding the taxation of distributions.

Management, Taxation, Acquisitions and mergers

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Pension simplification: update on distribution provisions

Article Abstract:

HR 4210 would go far towards resolving doubts about the 1991 proposals for the simplification of retirement plan distributions. Three concerns are addressed. First, the liberal income averaging rules for people turning 50 before Jan 1, 1986 would be kept, meaning an orderly phasing-out of this possibility. Second, the $750,000 exemption from the tax on excess distributions would be kept for one-time use. Third, the net unrealized appreciation exception would be retained. All three of these features would protect those who did their tax planning according to earlier rules.

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Rollovers for all: simplification or rip-off?

Article Abstract:

Several bills with more liberal and simplified pension rollover provisions and concomitant limitations on income averaging were introduced in 1991. Rollover simplification would have to be offset by revenue gains in view of the condition of government finances. Revenue would be gained by cutbacks on income averaging. The need to change income averaging rules is suspect, since the rules are elective.

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