Temporary indebtedness incurred by plan to facilitate sales of employer stock not acquisition indebtedness

Article Abstract:

The IRS ruled in PLR 9644063 that indebtedness incurred by the qualified plan in question was not acquisition indebtedness that would trigger unrelated business income taxation under IRC section 514(a). The matching thrift profit-sharing plan used a credit facility established by the employer to allow for the more orderly disposition of employer stock held in the plan. The loan amounts were paid back quickly and totaled less than 1% of plan assets. The IRS found that the indebtedness was incurred in furtherance of the plan's exempt purpose.

Tax exemption, Tax exemptions, Unrelated business income tax, Profit sharing

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DOL final regulations identify when assets become plan assets under ERISA

Article Abstract:

The US Department of Labor has issued final regulations on how quickly employers must transmit qualified plan contributions to the entity holding the plan's assets. The proposed regulations were criticized as too harsh, and the final regulations appear softened. Pension plans are given 15 days to transmit assets, though a 10-day extension can be used two times per year. The regulations become effective February 3, 1997.

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IRS rejects hybrid plan's use of excess defined benefit assets to fund employer matching contributions under 401(k) plan

Article Abstract:

A 1997 IRS ruling prohibited a hybrid plan from funding 401(k) plan employer matching contributions by using excess assets from a defined benefit plan. The IRS based its rejection on the tax benefit, contingent benefit, and exclusive benefit rules, as well as on the transaction's inherent inversion and relevant legislative history. However, arguments can made against the IRS's reasoning in this case.

Defined benefit plans

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