CCA 201013052: IRS advice on disqualifying a profit-sharing plan after questioned transfers

Number

201013052

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

Recovery of Certain Items Previously Deducted (Excluded v. Not Excluded); Exclusive Benefit of Employees or Their Beneficiaries

Topics

Income and deductions Retirement plans, IRAs, and annuities

Code sections

§ 111, § 401, § 6110

Ruling dated

July 16, 2009

Publicly released

April 2, 2010

Source

View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

View official IRS release (PDF)

Plain-English summary

Chief Counsel advice considered whether the tax benefit rule or a duty-of-consistency argument could support action against a profit-sharing plan. The memorandum discussed a possible plan disqualification if the IRS could establish that a redacted transfer was not a qualified transfer, potentially affecting a redacted taxable year. It also questioned why an earlier taxable year was the focus when no transfers or rollovers occurred in that year. The advice left the duty-of-consistency issue for a later determination and requested that a work item be opened.

Ruling snapshot

Question: Could the IRS use the tax benefit rule, the duty of consistency, or a questioned transfer to disqualify the profit-sharing plan?
Outcome: Advice given
Key authorities: IRC §§ 111 and 401; IRC § 6110(k)(3) not-precedent notice

Full text (IRS public release)

ID: CCA_2009071615272050 Number: 201013052
Office: -------------------------
Release Date: 4/2/2010

UILC: 111.00-00, 401.01-01

From: --------------------
Sent: Thursday, July 16, 2009 3:27:29 PM
To: -------------------------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
-------------
Subject: RE: Disqualification of a Profit Sharing Plan

----------------------

I spoke with --------------------in -----------------and he did not think the tax benefit rule would apply in this case.

Also, given that taxable years ------------------------------are close taxable years, he did not think that it was likely that we could proceed against the taxpayer on any of these years. However, there maybe a possibility if we could establish that the ------- transfer of $---------------was not a qualified transfer then we may be able to disqualify the plan for taxable year -------. ---------- did not understand why we focused on the ------- taxable year if there were no transfers or rollovers in taxable year -------.

Whether we can argue the duty of consistency we will have to wait for ------------to make that determination.

--------------------asked that he have a WLI opened for --------------. If you have questions for -----------------
-------- you can call him at ---------------------.

-------------------

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