The end of a beautiful relationship: the demise of the secular trust

Article Abstract:

Private Letter Rulings (PLRs) 9206009, 9207010, 9212019 and 9212024, issued by the IRS in late 1991, will probably discourage further usage of employer secular trusts. Historically, employers establishing these could be treated as trust grantors and thus receive tax deductions not only for contributions but also for investment income going to the employer and then reallocated to trust beneficiaries. The PLRs provide for taxation of the trust income for highly paid employees, take away the employer's status as grantor and apply qualified plans' tax provisions to this nonqualified plan.

Executives, Employee benefits, Trusts and trustees, Trustees, Trusts (Law)

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The correction of 403(b) plans

Article Abstract:

Employers can correct up to ten specific defects in IRC section 403(b) annuity plans if they follow detailed procedures under the Tax Sheltered Annuity Voluntary Correction Program. Employers can seek IRS approval of their requests to correct defects, pay negotiated sanctions, and receive IRS written assurances that it will not revoke the plans' tax exempt status. Employers who are ineligible for the program because they do not offer section 403(b) plans can seek other options.

United States, Laws, regulations and rules, Tax planning, Pension funds, Annuities

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Highlights of the new final 401(k) and 401(m) regulations

Article Abstract:

The IRS, in Aug 1991, filed comprehensive final regulations regarding qualified cash or deferred arrangements and matching contributions under Internal Revenue Code Sections 401(m) and 401(k). The issues addressed by the regulations include partnerships, employee stock ownership plans, collectively bargained plans, restructurings, successor plans, hardship distributions and governmental plans.

Qualified benefit plans, Salary reduction savings plans, 401K plans, Deferred compensation

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