Alfred E. Gallade - Page 17

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          Plan’s needs, including petitioner’s benefits.  The surplus above           
          all participants' needs (including petitioner’s) may be excess              
          due to actuarial error; however, this is not the issue with which           
          we are faced.  Petitioner attempted to assign only his vested               
          benefits in the Plan, not the amount by which the Plan may have             
          been overfunded.  With respect to this amount, the second part of           
          the example in section 1.401-2(b)(1), Income Tax Regs., is                  
          instructive.  Here, the “excess” benefits that resulted from                
          petitioner’s attempted waiver exist solely because petitioner               
          sought to change the benefit provisions of the Plan through the             
          September 4, 1985, resolution--not because of an erroneous                  
          actuarial computation.                                                      
               Petitioner caused the Plan to terminate and distribute his             
          accrued, fully vested benefit to him individually, while he                 
          contemporaneously decided that the funds would be best utilized             
          by GCI.  Consequently, petitioner contributed the funds to his              
          wholly owned corporation.  This investment decision did not                 
          change the substantive result:  the distribution was                        
          petitioner’s--not GCI’s.6  Accordingly, the attempted waiver by             
          petitioner in favor of GCI constitutes a taxable distribution               
          from the Plan on its termination.  See sec. 61(a)(11).7                     

          6 We also note that petitioner’s attempted assignment would                 
          have violated the express terms of the Plan, sec. 16.03, as well            
          as both ERISA sec. 206(d)(1) and I.R.C. sec. 401(a)(13).                    
          7 In these cases, petitioner was the only party who could                   
          have beneficially received the benefits from the Plan.  See Lucas           

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