June 15, 1989
Dear Sirs:
Re: Employee Benefit Plans
This is in reply to your letter of February 22, 1989 which was referred to us by the Registered Pension and Deferred Income Plans Division for reply.
Since the situation described in your letter deals with an actual proposed transaction, your request would more appropriately be the subject of an advance income tax ruling and therefore we cannot provide the following general comments.
The Plan in question provides that the income earned in trust must be paid to the employer in each year subject to a proviso that an equal amount be recontributed by the employer to the trust. You propose to amend the Plan to direct the payment of the trust's income to the employees instead of the employer.
The ultimate beneficiaries under the Plan are and will remain, after the proposed amendment, the employees. Accordingly, the amendment in the Plan to replacer the employer as income beneficiary by the employees will not, in our opinion, be a materially significant plan amendment that would make the Plan lose its "grandfathered EBP status".
As far as making your Agreement retroactive to January 1987, you would have to address yourself to the Assessing Division to obtain their opinion as to whether the allowance of deduction to the trust for the years 1987-1988 would be permitted.
The foregoing is an expression of opinion only and is not binding upon the Department. We trust, however, that it will be of assistance to you. We regret the delay in providing you with our reply.
Yours truly,
for Director Financial Industries Division Rulings Directorate