exec-compsm legal services in the areas of executive compensation and employee benefits
Law Offices of J. Edward Shillingburg
Newsletter Vol. 1, No. 1 September 1997
Stock Options in 401(k) Plans
The Travelers Group has received prelintinary favorable tax and prohibited
transaction exemptions for its plan to contribute options on Travelers
stock to its 401(k) plan. Interested in increasing employee holdings of
Company stock, Travelers considered a broad- based stock option plan but
concluded that there would be significant benefits if the options could
be included in a qualified plan. In PLR 9712033 (Dec.24, 1996), the IRS
provided favorable rulings, but in Announcement. 97- 45 it indicated that
it was taking a further look at the ruling. DOL has proposed favorable
exemptions from the prohibited transaction rules for the program. Exemption
Application No. D 10269, 61 Fed. Reg. 68,794 (Dec. 30, 1996). Final action
is pending.