Plan merger involving ESOP suspense account and s. 401(h) retiree medical accounts satisfies s. 414(l) safe harbor
Article Abstract:
The IRS found in PLR 9720037 that an employer's plan to merge a leveraged employee stock ownership plan (ESOP) with multiple components into a standard profit sharing plan would satisfy the safe harbor under IRC section 414(l). The regulations under section 414(l) detail how plans can be merged in compliance with that section. The regulations do not address section 401(h) medical benefits or ESOP suspense accounts, both of which were being merged into the new plan. The IRS ruled that these two types of benefits would not be adversely affected by the merger.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1997
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Termination of ESOP loan and acquisition of unallocated shares by employer does not violate s. 4975(d)(3) primary benefit requirement
Article Abstract:
The IRS determined in Technical Advice Memorandum 9624002 that a leveraged employee stock ownership plan's loan transactions qualified for the prohibited transaction exemption under IRC section 4975(d)(3). The arrangement was found to be primarily for the benefit of plan participants despite the facts that participants received minimal benefits and the proceeds were used primarily to retire a loan entered into by the employer. The employer also received income recognition deferral on the sale of the stock to the employee stock ownership plan.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1996
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Employer securities traded on NASDAQ SmallCap market are readily tradable for ESOP purposes
Article Abstract:
The IRS has ruled that employer securities traded on NASDAQ's SmallCap market are deemed to be "readily tradable," a definition that allows for the application of certain employee stock ownership plan rules. The stock's readily tradable status is due to its history of being traded and quoted on the SmallCap Market, a bona fide NASDAQ market. The IRS refused to rule on qualification issues for the plan in question.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1995
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