- 9 -
employee (as defined in section 414(q)) shall, in lieu of the
amount determined under paragraph (1) of section 402(b), include
in gross income for the taxable year with or within which the
taxable year of the trust ends an amount equal to the vested
accrued benefit of such employee (other than the employee's
investment in the contract) as of the close of such taxable year
of the trust.1
Gant was a participant in both plans from their inception in
1980. In a "Schedule of Benefits" for the Pension Plan for the
plan year ending June 30, 1987, Gant is listed as 100 percent
vested. Gant was also 100 percent vested in his account balance
in the Profit Sharing Plan since that Plan (into which the Money
Purchase Plan was converted) recognized all service with the
employer and utilized a 7-year vesting schedule.
Thus, determination of the central issue to be decided
hinges upon our analysis of three subissues: (1) Whether both the
Pension Plan and Profit Sharing Plan were ongoing plans as of the
1Sec. 402(b)(2) was added by the Tax Reform Act of 1986
(TRA), Pub. L. 99-514, sec. 1112(c)(2), 100 Stat. 2445, effective
for plan years beginning after Dec. 31, 1988. Sec. 402(b)(2)(A)
was amended by the Technical and Miscellaneous Revenue Act of
1988 (TAMRA), Pub. L. 100-647, sec. 1011(h)(4), 102 Stat. 3342,
3464, effective as if included in the TRA. Sec. 402(b)(2) was
amended again by the Unemployment Compensation Amendments of
1992, 106 Stat. 299. No substantive change was made to former
sec. 402(b)(2). It was merely renumbered as sec. 402(b)(4),
effective for distributions occurring after Dec. 31, 1992. Secs.
401(a)(26)(A), 402(b)(2) (1988 amendment), 410(b)(1), and
414(q)(1), are reproduced in the appendix.
Page: 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