Corrections to Final Regulation (1999)
Cutback of Distribution Options Permitted by ESOPs Sponsored by S Corporations
[4830-01-U]
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[Treasury Decision 8806]
RIN 1545-AV94
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendment.
SUMMARY: This document contains corrections to final regulations which
were published in the Federal Register on Friday, January 8, 1999, (64 FR 1125),
relating to employee stock ownership plans and protected benefits under section
411(d)(6) and qualified retirement plan benefits.
DATES: This correction is effective January 8, 1999.
FOR FURTHER INFORMATION CONTACT: Linda S. F. Marshall, (202) 622-6030
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are subject to this correction are under
section 411 of the Internal Revenue Code.
Need for Correction
On January 8, 1999, final regulations (TD 8806) were published in the
Federal Register at 64 FR 1125. These regulations inadvertently amended section
1.411(d)-4 Q&A-2(d)(2)(ii) instead of section 1.411(d)-4
Q&A-2(d)(1)(ii). This document is correcting this amendment by providing the
correct language for section 1.411(d)-4 Q&A-2(d)(1)(ii) and restoring the
language for section 1.411(d)-4 Q&A-2(d)(2)(ii).
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR Part 1 is corrected by making the following
correcting amendments:
PART 1 -- INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.411(d)-4 [Corrected]
Par. 2. Section 1.411(d)-4 Q&A-2 is amended by:
1. Removing paragraph (d)(1)(ii).
2. Redesignating paragraph (d)(2)(ii) as paragraph (d)(1)(ii).
3. Adding paragraph (d)(2)(ii).
The addition reads as follows:
Section 1.411(d)-4 Section 411(d)(6) protected benefits.
* * * * *
Q-2: * * *
A-2: * * *
(d) * * *
(2) * * *
(ii) ESOP investment requirement. Except as provided in paragraph (d)(2)(iii)
of this Q&A-2, benefits provided by employee stock ownership plans will not
be eligible for the exceptions in paragraph (d)(1) of this Q&A-2 unless the
benefits have been held in a tax credit employee stock ownership plan (as
defined in section 409 (a)) or an employee stock ownership plan (as defined in
section 4975 (e)(7)) subject to section 409 (h) for the five-year period prior
to the exercise of employer discretion or any amendment affecting such benefits
and permitted under paragraph (d)(1) of this Q&A-2. For purposes of the
preceding sentence, if benefits held under an employee stock ownership plan are
transferred to a plan that is an employee stock ownership plan at the time of
transfer, then the consecutive periods under the transferor and transferee
employee stock ownership plans may be aggregated for purposes of meeting the
five-year requirement. If the benefits are held in an employee stock ownership
plan throughout the entire period of their existence, and such total period of
existence is less than five years, then such lesser period may be substituted
for the five year requirement.
* * * * *
Cynthia E. Grigsby
Chief, Regulations Unit
Assistant Chief Counsel
(Corporate)
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