Lori Foresz Posted April 9, 2004 Share Posted April 9, 2004 Hi, If a plan covers a 100% owner of a corporation and his daughter, is the plan subject to PBGC coverage? If stock attribution rules apply, then the daughter would be treated as a substantial owner, but I can't find information on whether stock attribution rules apply for this purpose. Can anyone help? Many thanks Link to comment Share on other sites More sharing options...
Mike Preston Posted April 9, 2004 Share Posted April 9, 2004 It has been a long time since I've looked this up, but if I remember correctly, a son or daughter over the age of majority as a plan participant subjects the plan to Title IV. Hopefully, somebody else has the cite handy. Link to comment Share on other sites More sharing options...
mwyatt Posted April 9, 2004 Share Posted April 9, 2004 Think you're on the right track here as far as kids in the Plan go. Think the only exemption would be if it was Substantial Owner and spouse. Link to comment Share on other sites More sharing options...
david rigby Posted April 9, 2004 Share Posted April 9, 2004 I guess we're assuming no other exemptions from ERISA section 4021(b) ? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
Blinky the 3-eyed Fish Posted April 13, 2004 Share Posted April 13, 2004 Here is the logic flow: Plans that cover substantial owners are exempt from PBGC coverage. A substantial owner is a person that owns 10% or more (or more than 10% - I can't remember) of the sponsor, including attribution, within the last 5 years. 1563 attribution governs PBGC ownership determinations. Under 1563 in this situation, the child is not be attributed ownership at all if she is over 21. So the plan becomes covered by the PBGC (assuming no other exemptions) when the daughter turns 26. "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs." Link to comment Share on other sites More sharing options...
jkdoll2 Posted July 24, 2012 Share Posted July 24, 2012 Here is the logic flow:Plans that cover substantial owners are exempt from PBGC coverage. A substantial owner is a person that owns 10% or more (or more than 10% - I can't remember) of the sponsor, including attribution, within the last 5 years. 1563 attribution governs PBGC ownership determinations. Under 1563 in this situation, the child is not be attributed ownership at all if she is over 21. So the plan becomes covered by the PBGC (assuming no other exemptions) when the daughter turns 26. Same question as this in 2004 - we dont know why there is an exemption to age 26 - see above. Why doesnt the plan have to become PBGC covered when the daughter is 21, why can they wait until she is 26? Where is the rule for that? Thanks Link to comment Share on other sites More sharing options...
Blinky the 3-eyed Fish Posted July 24, 2012 Share Posted July 24, 2012 A substantial owner by definition is anyone that has 10% ownership or more within the last 5 years. 1563 attribution attributes ownership from parents to the child until age 21. Once the child is past the age of 21, the attribution rules from the parents change (you can look up those details). So, until age 26, the child is treated as a substantial owner. Once they hit 26 though, without 10% or more of their own non-attributed ownership, they no longer are considered a substantial owner. Make sense? "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs." Link to comment Share on other sites More sharing options...
Effen Posted July 24, 2012 Share Posted July 24, 2012 Good to see the blinking fish again! I was wondering if you were still swimming around out there somewhere. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice. Link to comment Share on other sites More sharing options...
jkdoll2 Posted July 24, 2012 Share Posted July 24, 2012 A substantial owner by definition is anyone that has 10% ownership or more within the last 5 years. 1563 attribution attributes ownership from parents to the child until age 21. Once the child is past the age of 21, the attribution rules from the parents change (you can look up those details). So, until age 26, the child is treated as a substantial owner. Once they hit 26 though, without 10% or more of their own non-attributed ownership, they no longer are considered a substantial owner.Make sense? Thanks for the answer - I get it now. Link to comment Share on other sites More sharing options...
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