Top-Heavy "add backs" in the case of plan termination.

[KJohnson]

Back in 2002 the excerpt posted below was on Sal Tripodli's website. Does anyone know of any updates on this or formal guidance? This provision of EGTRRA with regard to plan terminations is REALLY poorly drafted-- even for a Code provision.

IRS apparently interprets IRC §416(g)(3) as applying 5-year add-back rule to plan termination distributions (added March 28, 2002).

We have learned that the IRS Headquarters in Washington, DC, interpret IRC §416(g)(3) as applying 5-year add-back rule to plan termination distributions to the extent such distributions are made for reasons other than severance from employment, disability or death. There is some disaggreement in the pension community about the proper interpretation of this provision. An opposing view is that the placement of the rule for plan termination distributions in the last sentence of IRC §416(g)(3)(A), which provides for a 1-year add-back rule, implies that the 5-year add-back rule in §416(g)(3)(B) for distributions made for reasons "other than severance from employment, death, or disability" was not intended to apply to plan termination distributions. We support this opposing view, but apparently IRS feels differently, although it is not clear when any official guidance will be released. The 2002 Edition of The ERISA Outline Book reflects the view that a 1-year lookback applies to plan termination distributions. Given the apparent interpretation by the IRS, we have posted references to pages of the 2002 Edition that are affected. For details, click on "ERISA Outline Book" in the menu in the left margin of this page. At the Outline Book page, there is a submenu under "Outline Book" to search for current developments by chapter and date, and for an Errata Page. The IRS position on the lookback period is discussed in the "Current Developments by Chapter" (see the item added under Chapter 1 for March 28, 2002) and in the "Current Developments by Date" (see the item dated March 28, 2002). The Errata Page, which lists items by Chapter, also includes a discussion of this issue under Chapter 1 in an item dated March 28, 2002.

[Guest merlin]

The 2003 edition of the ERISA Outline Book says pretty much the same thing as the 2002 edition.