- 12 -
he had been, in at least one prior case, a Court of Appeals has
held a beneficiary of a one-person pension plan liable under
section 4975. See Wood v. Commissioner, 955 F.2d 908 (4th Cir.
1992). Petitioner attempts to distinguish Wood by arguing that
the issue there related to a satisfaction of a funding
obligation, whereas here he transferred the real estate to the
MPP in repayment of a loan.4 We do not believe that this bare
difference in fact leads to a different result. The repayment
of a loan, like the honoring of a funding obligation, satisfies
a debt owed by the transferor. We see no meaningful
distinction that may be drawn from the fact that the obligation
in one case stems from a borrowing, whereas the obligation in
the other stems from a contractual promise to set aside a
stated sum of money for the benefit of plan participants.
In both cases, a transfer is made to satisfy an obligation.
For present purposes, the former obligation is
indistinguishable from the latter.
The Congress' goal in enacting section 4975 "was to bar
categorically a transaction that was likely to injure the
pension plan." Commissioner v. Keystone Consol. Indus., Inc.,
4 Generally, any lending money between a plan and a
disqualified person is a prohibited transaction. Sec.
4975(c)(1)(B). Sec. 4975(d)(1), however, carves out an exception
in the case of certain loans that meet the criteria set forth
therein. Respondent does not assert that petitioner's loans from
the Plans were outside this exception.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011