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plan year ended June 30, 1991; (2) if so, whether one of the
reasons both plans were not exempt from tax was the failure of
the plans to meet the requirements of either section 401(a)(26)
or section 410(b); and (3) whether Gant was a highly compensated
employee under section 414(q) during the taxable years at issue.
For the reasons stated below, we agree with respondent.
I. Plan Disqualification in Plan Year Ending June 30, 1991
As stated, the first subissue is whether the Pension Plan
and Profit Sharing Plan were ongoing plans as of June 30, 1991.
Petitioners assert that Products terminated both the Pension Plan
and Money Purchase Plan (predecessor of the Profit Sharing Plan)
during their respective Plan years ended June 30, 1988.
Petitioners point to the fact that the Products board of
directors adopted a resolution on October 13, 1987, to
immediately terminate both the Pension Plan and Money Purchase
Plan. Furthermore, they argue, Gant wrote a letter on October
15, 1987, to Pension Services requesting that the Pension Plan be
discontinued as of November 1, 1987. It follows from
petitioners' assertions that under their theory the plans were
not required to cover employees employed by Products after the
plan year ending June 30, 1988. Thus, petitioners appear
ultimately to argue that the plans could not have violated the
participation requirements of section 401(a)(26) or coverage
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