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termination of the Defined Benefit Plan, was contrary to the
purpose of ERISA.
In Winger's Depart. Store, Inc. v. Commissioner, 82 T.C. 869
(1984), the trustees of an employer-sponsored defined benefit
pension plan lent a major portion of the trust's assets to the
employer, through the employer's sole shareholder, to meet the
company's working capital needs. The loans were unsecured,
interest payments to the trust were delinquent, and most of the
principal was not repaid. The sole shareholder and his spouse
were cotrustees of the trust, and most of the benefits under the
plan accrued to the sole shareholder. We found that the trust
had not been operated for the exclusive benefit of the employees
and their beneficiaries, and we upheld the Commissioner's
determination that the related plan was no longer qualified under
section 401(a).
In Ada Orthopedic, Inc. v. Commissioner, T.C. Memo. 1994-
606, the trustees of an employer-sponsored defined benefit plan
lent a substantial portion of the plan's assets through unsecured
loans to participants, relatives, and friends of the trustees.
Some of the loans were made or extended without written
promissory notes, and principal and interest remained unpaid on
some of the loans. In addition, the trust acquired real property
by unrecorded quitclaim deeds without investigating title and
subsequently lost that property upon foreclosure of preexisting
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