Compliance March 2, 2004

IRS Issues Stock Rollover Rules

March 2, 2004 (PLANSPONSOR.com) - The US Internal Revenue Service (IRS) has issued guidelines under which a corporation's subchapter S election will not be terminated when an employee stock ownership plan (ESOP) distributes company stock to a participant's individual retirement account (IRA) in a direct rollover.
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The guidelines set out in IRS Rev. Proc. 2004-14 include, according to CCH:

  • the terms of the ESOP must require that the S corporation repurchase its stock immediately upon the ESOP’s distribution to the IRA
  • pursuant to the terms of the ESOP, (a) the S corporation must actually repurchase its stock contemporaneously with, and effective on the same day as, the distribution, or (b) the ESOP must be permitted to assume the rights and obligations of the S corporation to repurchase the stock immediately upon the distribution to an IRA and the ESOP actually repurchases the stock contemporaneously with, and effective on the same day as, the distribution.
  • no income, loss, deduction, or credit attributable to the distributed S corporation stock under Code Sec. 1366 can be allocated to the participant’s IRA.

>For more information, go to  http://www.irs.gov/irb/2004-07_IRB/ar14.html .

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Compliance March 1, 2004

Babies 'R' Us Settles Same-Sex Harassment Case

November 15, 2002 (PLANSPONSOR.com) - A former Babies "R" Us employee who claimed he was sexually harassed and once forcibly partially undressed has won a $205,000 lawsuit settlement, the US Equal Employment Opportunity Commission (EEOC) said.
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According to an Associated Press story, the EEOC reached the out-of-court agreement on behalf of Andres Vasquez with the Paramus, New Jersey-based Toys “R” Us, which owns Babies “R” Us.

The EEOC said Vasquez began working at a New Jersey Babies “R” Us store in February 2000, but quit seven months later, claiming he was the target of derogatory and unwelcome comments.

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Spokesman Edward McCaffrey said other co-workers felt Vasquez did not meet stereotypes of how men should look or behave. “His mannerisms were viewed by his co-workers as not masculine enough,” McCaffrey told the Associated Press.

According to the EEOC, the company took no corrective action even when, at one point, Vasquez claimed co-workers forcibly stripped him of his pants and underpants. The EEOC ruled that Vasquez’ federal civil rights had been violated by being subject to a sexually hostile work environment and filed suit.

As part of the agreement submitted to US District Judge William Bassler, Babies “R” Us admitted no wrongdoing in the case, but will instruct all New Jersey workers annually about federal anti-discrimination laws, the AP reported.

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