10 April 1992 Income Tax Severed Letter 9206575 - Employee profit sharing plan — forfeitures

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

SUBJECT: EMPLOYEE PROFIT SHARING PLAN - FORFEITURES SECTION: 144(1)(d)]

April 10, 1992

Registered Plans Division Financial Industries
S. M. Kotlar, Director Division
D. S. Delorey
957-8953
Attention: Geoff Turrell

• 5- 920657

Employee Profit Sharing Plan
XXX

This is in reply to your memorandum of February 27, 1992, asking us to reply to a letter from XXX addressed to your Division.

The content of XXX letter indicates that they are aware of, and have accepted, the interpretation that this Division gives to paragraph 144(l)(d) of the Act; i. e., forfeitures must be allocated to plan members and cannot be used to reduce the required employer contributions. The issue is thus not one of interpretation; rather, XXX is seeking clarification of comments made in a letter from your Division to them dated February 14, 1989 concerning what you consider to be acceptable administrative procedures with respect to the XXX plan. In this regard, they ask

• "that the employer XXX be permitted to continue to administer the Plan as it was originally drafted and approved."

Accordingly, it would be more appropriate in our view for your Division to reply to XXX letter and we are therefore returning the documentation sent to us with your memorandum and ask that you reply to the letter.

for Director
Financial Industries Division
Rulings Directorate