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amendments resulted from a “business event or condition”, the
court held that the payment of a 13th check depended upon the
business event or condition of the Plan’s being overfunded for
the year in which the checks were issued. The court concluded
that the payment of the 13th check did not confer a
nonforfeitable benefit under section 1.411(d)-4, Income Tax Regs.
Here, in his reply brief, respondent concedes that the
“effective date” provisions of section 1.411(d)-4, Q&A-1(c)(1),
Income Tax Regs., require that only the 1989 and 1990 amendments
to the Plan may be considered for purposes of section 1.411(d)-4,
Income Tax Regs. Respondent continues to assert, however, that
the ad hoc payments made in 1989 and 1990 should be considered to
be part of the Plan, although the NPF COLA did not come into
effect until 1991.
We disagree. Here, as in DeCarlo, petitioner’s counsel
warned in 1988 that, as a result of the new regulations, three
consecutive plan amendments inserting an ad hoc COLA could be
construed to be a permanent amendment providing COLAs. Having
been alerted to the effects of repeated ad hoc payments,
petitioner in 1989 doubled the funding required for the COLAs.
Nevertheless, two ad hoc payments were still needed to meet the
intended 3-percent COLA for 1989 and 1990. Thus, here, as in
DeCarlo, the NPF Fund’s two ad hoc payments were necessary
because of adverse “business events or conditions”. Moreover, in
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