- 55 -
E. Forms 5500-C/R
Forms 5500-C/R filed with the Commissioner on On-Site's
account in the Prime Plan included the following information:
1989 1990 1991 1992 1993
Yearend assets $138,653 $137,306 $147,048 $157,095 $164,013
Income 38,867 14,163 13,054 13,087 12,434
Expenses 241 15,510 3,312 3,076 5,516
Contributions 50,030 - 0 - - 0 - - 0 - 670
These forms also reported the payment of $11,858, $13,797, $54,
zero, and zero in insurance commissions during the respective
years.
OPINION
We must determine the tax consequences flowing from the
Prime Plan, a purported multiple employer welfare benefit plan
that has been marketed nationwide by its promoters as a viable
tax planning device and subscribed to by hundreds of entities
whose employee/owners have sought primarily the promised tax
benefits. The designers of the Prime Plan struggled to comply
with section 419A(f)(6)'s exception to the applicability of
subpart D. The designers followed the evolution of subpart D
through the Congressional committees, and they aspired to create
a valid welfare benefit plan that met the legislative intent for
section 419A(f)(6). The designers were familiar with the tax and
labor provisions of employee benefit law.
Based on their understanding of the genesis of subpart D,
the drafters concluded that section 419A(f)(6) covered their
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