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The IRS issued final regulations to provide guidance on funding requirements affecting single-employer defined benefit pension plan sponsors, administrators, participants and beneficiaries. The regulations in TD 9467 concern (1) the determination of the value of plan assets and benefit liabilities for purposes of the single-employer defined benefit plan funding requirements, (2) the use of certain funding balances maintained for those plans, and (3)benefit restrictions for certain underfunded defined benefit pension plans. The final regulations reflect various provisions added by the Pension Protection Act of 2006 (PL 109-280), as amended by the Worker, Retiree and Employer Recovery Act of 2008 (PL 110-458).


IRC § 430 specifies the minimum funding requirements that apply to single-employer defined benefit pension plans (including multiemployer plans) under section 412. Section 436 limits the benefits that may apply to a single-employer defined benefit plan based on its funded status. Sections 430 and 436 do not apply to multiemployer plans.


In 2007, the IRS issued proposed regulations on the section 403(f) rules for funding balances and the section 436 benefit restrictions for underfunded plans (REG-113891-07). The Service also issued proposed regulations that year on the measurement of assets and liabilities for pension funding purposes (REG-139236-07). These proposed regulations generally covered the rules of subsections 430(d), (g), (h)(2), and (i). TD 9467 finalized the proposed rules in REG-113891-07 regarding funding balances and benefit restrictions for underfunded plans and (with certain revisions) the rules proposed in REG-139236-07 regarding measurement of assets and liabilities for pension funding purposes.




The IRS launched a Web-based resource designed to help owners and managers of small and medium-size businesses choose the type of tax-favored retirement plan that suits them best. The IRS Retirement Plans Navigator ( also is intended to aid employers’ compliance with pension law and regulation. It compares features of SIMPLE IRAs and other plans incorporating an IRA, as well as 401(k)s and profit sharing plans, defined benefit plans and plans for tax-exempt organizations or units of government. It includes checklists and “fixit guides” for correcting errors, as well as a table comparing aspects of the highlighted plans including administrative requirements, accessibility of plan assets and maximum contributions.


The Service said in a news release (IR 2009-91) that it will update its Retirement Plans Navigator as pension laws and regulations change.




The Eighth Circuit Court of Appeals affirmed the Tax Court’s denial of an estate tax deduction for a qualified family-owned business interest (QFOBI) in Estate of Farnam v. Commissioner (130 TC 34, see also “Tax Matters: All in the Family?JofA, May 08, page 88).


If a QFOBI’s value exceeds half the value of the adjusted gross estate, it can qualify for a deduction of up to $675,000 under IRC § 2057. The estates of Duane and Lois Farnam sought to characterize unsecured debt owed the couple by their family-owned corporation as a QFOBI. The Eighth Circuit agreed with the Tax Court that the definition of a QFOBI in section 2057(e)(1) limits it to an equity or ownership interest and does not include an unsecured loan.


Judge Bobby E. Shepherd dissented from the holding of the other two judges of the panel, writing that the language of section 2057(e) was sufficiently broad to encompass such loans. He also cited the parenthetical phrase “regardless of the form in which it is held” in a House conference committee report’s version of the definition of a QFOBI as suggesting Congress intended for it to include other types of interests besides capital or equity. Such an understanding also would correspond with Congress’ general purpose in enacting the provision, Shepherd wrote: preventing estates from having to liquidate family businesses to pay estate taxes.




The AICPA Tax Executive Committee released newly revised Statements on Standards for Tax Services (SSTSs), effective Jan. 1, 2010. The SSTSs are enforceable standards of tax practice for AICPA members. The TEC considered letters commenting on an exposure draft issued in November 2008 and approved the draft SSTSs with minor modifications. The revised SSTSs are available in “Official Releases,” Jan. 10, page 77, and on the AICPA Tax Section Web pages. A task force is updating SSTS Interpretations 1-1 and 1-2 and, using comments received in response to the ED, is developing practice aids and articles.



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