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ESOP, the MGMT ESOP did not satisfy the requirements of section
410(b).
We conclude that respondent’s revocation of the MGMT ESOP’s
qualification was justified.7 We note in passing that two or
more plans may sometimes be aggregated so that the number of
participants benefiting in both plans may be taken into
consideration when determining whether minimum participation
standards have been met. Sec. 410(b)(6)(B). Petitioner has
failed to produce credible evidence that the MGMT ESOP can be
aggregated with the MFG ESOP for this purpose. Nor has
petitioner produced, and the record does not contain, evidence
that would support a conclusion that the MGMT ESOP would qualify
for subsequent plan years.
To reflect the foregoing,
Decision will be entered
for respondent.
7 Our holding complies with the intent of Congress in
enacting sec. 414(b) as expressed in H. Rept. 93-779, at 49
(1974), 1974-3 C.B. 244, 292:
The committee, by this provision, intends to make it
clear that the coverage and antidiscrimination
provisions cannot be avoided by operating through
separate corporations instead of separate branches of
one corporation. For example, if managerial functions
were performed through one corporation employing highly
compensated personnel, which has a generous pension
plan, and assembly-line functions were performed
through one or more other corporations employing lower-
paid employees, which have less generous plans or no
plans at all, this would generally constitute an
impermissible discrimination.* * *
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