7
On November 1, 1986, Ehmann, Waldman & Brody, P.A. (EWB
P.A.) was formed. Brody was not a shareholder or an officer of
EWB P.A. The record does not reveal who formed EWB P.A.
Sometime around November 1, 1986, Brody ceased employment with
Brody Enterprises and entered into an employment contract with
EWB P.A. On November 1, 1987, Brody terminated his employment
with EWB P.A.
OPINION
Each of petitioners' plans was a small defined benefit
pension plan. A defined benefit pension plan provides a
participant at retirement with the benefit stated in the plan.
The costs of benefits payable from such plans are funded
incrementally on an annual basis over the preretirement period.
Secs. 404, 412. Contributions made to the plans, within certain
limits, are deductible. Sec. 404(a)(1). Earnings on the
contributions are not taxed as they accumulate. Sec. 501(a).
Plan assets are taxed to participants only as they are paid out
as benefits. Sec. 402(a)(1). The payment of benefits under a
qualified plan is limited. Sec. 415. These cases focus on the
limitations in section 415.
Section 415 was added to the Internal Revenue Code by
section 2004(a)(2) of the Employee Retirement Income Security Act
of 1974 (ERISA), Pub. L. 93-406, 88 Stat. 829, 979. The
enactment of ERISA was a legislative attempt to assure equitable
and fair administration of pension plans and to remedy problems
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