Waiving benefits like you just don't care.

[Blinky the 3-eyed Fish]

A PBGC covered defined benefit plan is winding down. The participants are 2 parents and 5 children over age 21. The parents own the company.

The plan is underfunded, so I have been asked to come up with a creative way to shift more dollars to the parents, something the children are willing to do. Right now the children are not considered owning any of the corporation because of the 1563 attribution rules used for PBGC purposes, so they cannot waive benefit as majority owners.

I have come up with the idea that 2 of the children can be given options to purchase the half of the company each. That would make them majority owners too and they could waive benefits. But that is not good enough, so the search continues.

Any thoughts, no matter how aggressive or ridiculous, that this could be done? It is not something I have to recommend, but rather just come up with as a possibility.

[WDIK]

Perhaps you could use some of the strategies being touted by these new 412(i) hybrid plans I've been hearing about....

[Belgarath]

I think your proposed solution is pretty clever to start with. I honestly can't think of anything to help. But tell me, is there any potential problem with gift taxes or some such stuff with giving the children options? I truly have no idea - just wondered. And why wasn't your proposed solution good enough? Sounds like they want to eat their cake and have it too...