- 8 - Pension Plan annuity contracts was $491,904. The Profit Sharing Plan annuity contracts were redeemed for $69,231. Gant deposited the redemption proceeds into each plan's respective trust. After June 30, 1991, Gant's benefits increased. His accrued benefits in the Pension Plan increased due to his additional service with Products and his Profit Sharing Plan vested account balance increased due to his pro rata share of income from the Profit Sharing Plan. OPINION The central issue for decision is whether petitioners must include Gant's vested accrued benefits in Products' Pension Plan and Profit Sharing Plan in gross income for petitioners' 1991, 1992, and 1993 taxable years. Section 402(b) provides for a variety of consequences to the participants in a plan under section 401(a) when the trust associated with the plan is not exempt under section 501(a). Section 402(b)(2) and (4), as in effect for the years in issue, contain a special rule when the trust tax exemption is lost due to coverage violations in the plan. Section 402(b)(2)(A) provides that if one of the reasons a trust is not exempt from tax under section 501(a) is the failure of the plan of which it is a part to meet the employee participation or minimum coverage requirements of section 401(a)(26) or 410(b), respectively, then a highly compensatedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011