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design for the Prime Plan. One of the designers, Mr. Weiss,
requested a ruling from the Commissioner that the Prime Plan
qualified under section 419A(f)(6). The Commissioner did not
issue a ruling in reply to Mr. Weiss' ruling request, and, to
date, the Commissioner has not issued regulations construing
section 419A(f)(6). On May 1, 1995, the Commissioner released
Notice 95-34 (the Notice), 1995-1 C.B. 309, to provide guidance
on "the significant tax problems" raised by certain trust
agreements being promoted as multiple employer welfare benefit
funds exempt from the limits of sections 419 and 419A. Id.
Although the Notice did not mention the Prime Plan by name, the
Notice indicated that the Commissioner disagreed with Prime that
its plan was within section 419A(f)(6).
Having failed in their attempt to receive the Commissioner's
assurance that the Prime Plan was a 10 or more employer plan
under section 419A(f)(6), Prime nevertheless began marketing the
plan in 1988, relying on the designers' opinions as to the
validity of the promised tax benefits that Prime believed flowed
from the Prime Plan. The Commissioner now challenges these tax
benefits in the instant litigation. The Commissioner argues
primarily that the Prime Plan is a plan of deferred compensation.
Petitioners argue that the Prime Plan provides merely welfare
benefits. The Commissioner argues alternatively that the Prime
Plan is actually an aggregation of plans that is outside the
scope of section 419A(f)(6). Petitioners argue that the Prime
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