July 20, 1989
TO: PENSION MEMBERS NO. 32-89
RE: IRS REVENUE RULING CONCERNING WASTING TRUSTS
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Attached is a copy of IRS Revenue Ruling 89-87, which
addresses a plan that was amended to terminate the plan and cease
accruals, but assets were held in the trust which remained in
effect in order to make distributions when employees became
entitled to payments.
The revenue ruling holds that a qualified plan under which
benefit accruals have ceased is not terminated if, after an
amendment is adopted to terminate the plan, the plan assets are
not distributed as soon as administratively feasible. The
determination of whether a distribution is made as soon as
administratively feasible depends upon the facts and
circumstances, but the IRS generally will presume that a
distribution is not made within the required time if the
distribution is not completed within one year following the date
of plan termination. If the plan is not considered terminated,
it is an ongoing plan and must meet the requirements of section
401(a) in order to continue its qualified status.
The revenue ruling provides relief from retroactive
application for certain plans.
We will keep you informed of further developments.
Kathy D. Ireland
Assistant General Counsel
Attachment