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- Title
Maximizing Strategies Under Sections 404 and 415: Deductions and Allocations for C-Corporation and S-Corporation ESOPs.
- Abstract
The article presents information on the research paper "Maximizing Strategies Under Section 404 and 415: Deductions and Allocations for C-Corporation and S-Corporation ESOPs," by Karen K. Stogdill, published in the October 2000 issue of the periodical "ESOP Report." Maximizing the deductible limit under Internal Revenue Code Section 404 or raising maximum annual additions under Section 415 is often beneficial for plans that want to increase allocations to participants. These strategies are also useful if plans want to increase debt payments in leveraged employee stock ownership plans or reduce the taxable income of a corporation. Methods for maximizing the utility of Section 404 include adding a money purchase pension plan, leveraging an ESOP, using S-corporate profit distributions to pay loan interest or reallocating excess annual additions in the ESOP. Section 415's usefulness can be enhanced by increasing its limits, using the lesser of cost or market, using S-corporation profit distributions to pay loan principals or interest, and forcing the passage of the one-third test.
- Subjects
EMPLOYEE stock options; EMPLOYEE ownership; EMPLOYEE benefits; INTERNAL revenue law; INTERNAL revenue; CORPORATE profits
- Publication
Benefits Quarterly, 2001, Vol 17, Issue 4, p102
- ISSN
8756-1263
- Publication type
Article