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IRS PLR: Pension Plan Termination, Transfer of Its Assets to Qualified Replacement Plan Won’t Be Employer Reversion (IRC §4980)

July 29, 2022, 5:00 AM

Three employee plans receiving assets from the employer’s terminated pension plan will be treated as a single qualified replacement plan, and the transfer therefore not treated as an employer reversion from a qualified plan, for purposes of I.R.C. §4980 (which otherwise would impose a 20% excise tax), the IRS ruled. Further, Taxpayer’s method of allocating excess assets to the receiving plans over seven plan years through a suspense account is consistent with the plans being a single qualified replacement plan and is in compliance with the allocation requirements of §4980(d)(2)(C). Section 4980(d)(2) also provides employee participation ...