Employee Plans. basic, and field prototype plans must be

Employee Plans Administrative 168.1 Affiliated service group; individually designed plans; amendment. An extension is provided of the time period within which individually designed retirement plans must be amended to comply with the provisions of section 414(m). Notice 82-8, 1982-1 C.B. 357. 168.2 Affiliated service group; master or prototype plans; amendment. The time period within which master or prototype plans (including Simplified Employee Pensions), pattern plans, basic plans, and field prototype plans must be amended to comply with section 414(m) is provided. Notice 82 7, 1982-1 C.B. 356. 168.3 Amending plans to comply with Code section 401(a)(31). This procedure provides a simplified method for certain plan sponsors to amend their plans to comply with section 401(a)(31) by adopting either a model amendment or a non-model amendment for approval by the Service. Rev. Procs. 89-9, 89-13, 90-17, 91-66, and 92-60 modified. (Sec. 601.201, S.P.R.) Rev. Proc. 93-12, 1993-1 C.B. 479. 168.4 Beginning distribution date. Under the criteria described, the required beginning date for minimum distributions as described in section 403(b)(10) of the Code as added by section 1852(a)(3)(A) of the Tax Reform Act of 1986 may be modified. Notice 88-39, 1988 1 C.B. 525. 168.5 Delegation of authority. Reorganization Plan No. 4 of 1978, dealing with the authority to administer certain provisions of ERISA and the Code dealing with employee plans and prohibited transactions, became effective December 31, 1978. E.O. 12108, 1979-1 C.B. 478. 168.6 Delegation of authority. The transfer of authority between the Secretary of the Treasury and the Secretary of Labor to administer certain provisions of ERISA and the Code dealing with employee plans and prohibited transactions is set forth. Reorganization Plan No. 4 of 1978,1979-1 C.B. 480. 168.7 Determination and opinion letters. Determination and opinion letters issued by the Service will not be reviewed for the qualification requirements of the Tax Reform Act of 1986 until further notice is given. Notice 86-13, 19862 C.B. 377. 168.8 Examination of returns; appeals. Procedures are set forth for the appeal of findings made by Key District Offices as a result of the examination of returns dealing with employee plan issues. 1.401-1, 1.403(a)-1, 1.405-1. (Sec. 601.201, S.P.R.; Secs. 401, 403, 405, 86 Rev. Proc. 78-3, 1978-1 C.B. 552. 168.9 Failure to file Form 5500 Schedules B and SSA; penalties. The penalties for failure to file Schedule B (Form 5500), Actuarial Information, and Schedule SSA (Form 5500), Registration Statement Identifying Separated Participants with Deferred Vested Benefits, are imposed by sections 6692 and 6652(e)(1) respectively. Penalties imposed by section 6652(f) do not apply to the failure to file these schedules. 301.6057-1, 301.6058-1, 301.6059-1, 301.6652-3, 301.6692-1. (Secs. 6057, 6058, 6059, 6652, 6692; 86 Rev. Rul. 84-54, 1984-1 C.B. 260. 168.10 Individual retirement plans; ruling applications. Jurisdiction for the approval of individual retirement accounts established by employers and associations of employees is transferred from the Key District Directors to the National Office effective for requests received after October 3, 1976. Rev. Proc. 75-6 modified. (Sec. 601.201, S.P.R.; Sec. 408, 86 Rev. Proc. 76-32, 1976-2 C.B. 654. 168.11 Individually designed plans; amendment; extension of time. An extension of time and a simplified method are provided for amending individually designed retirement plans to comply with the Tax Equity and Fiscal Reponsibility Act of 1982 (TEFRA). Notice 83-4, 1983-1 C.B. 532. 168.12 Individually designed plans; master or prototype plans; extension of time to conform to TEFRA. Notice 83-4 is revised to extend the period of time allowed plan sponsors to amend plans to conform to TEFRA and certain other areas of the law. Notice 85-14, 1985-2 C.B. 407. 168.13 Information return; insurance contracts; Form 990-P. The procedure for filing Form 990-P by trustees of exempt employees trusts which invest wholly or partially in insurance company contracts is prescribed. 1.6033 1. (Sec. 6033, 86 Rev. Proc. 57 15, 1957-1 C.B. 745. 168.14 Information return; use of Labor Department forms. Effective December 31, 1966, copies of the information forms filed with the U.S. Department of Labor pursuant to the Welfare and Pension Plans Disclosure Act, may be used in partial satisfaction of the requirements of reg. 1.404(a) 2, which deals with the information to be furnished by an employer claiming deductions under section 404. Rev. Proc. 60-14 superseded. 1.404(a) 2. (Sec. 601.602, S.P.R.; Sec. 404, 86 Rev. Proc, 66 51, 1966 2 C.B. 1261. 168.15 Issuance of notification letters; certain regional prototype plans. Procedures are set forth pertaining to the issuance of notification letters relating to the qualification of certain regional prototype defined contribution and defined benefit plans under sections 401 and 403(a) of the Code and the status of related trusts or custodial accounts under section 501(a). Rev. Proc. 84 86 superseded and Rev. Proc. 89-4 modified. 1.401-1, 1.403(a)-1, 1.501(a)-1. (Sec. 601.201 S.P.R.; Secs. 401, 403, 501, 86 Rev. Proc. 89-13, 1989-1 C.B. 801. 168.16 Master or prototype plans, amendment; extension of time. The time period is extended within which the master, prototype, pattern, basic, and field prototype plans must be amended to comply with section 414(m), section 415 as amended by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), and the regulations. Notice 83-5, 1983-1 C.B. 534. 168.17 Master and prototype plans; volume submitter plans. A streamlined procedure is established for approved master and prototype, regional prototype, and volume submitter plans to amend for recent changes in the regulations. Rev. Proc. 89 9, 89 13, and 90-17 modified. (Sec. 601.201, S.P.R.) Rev. Proc. 92-41, 1992 1 C.B. 870. 168.18 Modification of Rev. Procs. 89-9 and 89 13. This revenue procedure modifies Rev. Procs. 89 9 and 89 13 regarding certain requirements for approval by the Service of master or prototype pension, profit-sharing and annuity plans and regional prototype plans. Rev. Procs. 89 9 and 89-13 modified. (Sec. 601.201, S.P.R.) Rev. Proc. 90-21, 1990-1 C.B. 499. 168.19 Obsolete revenue rulings. A list is given of revenue rulings in the employee plans

area which are no longer considered determinative. 301.7805 1. (Sec. 7805, 86 Rev. Rul. 91-8, 1991-1 C.B. 281. 168.20 Opinion and notification letters; nonstandardized safe harbor plans. Procedures are set forth for requesting opinion, notification, and determination letters for nonstandardized safe harbor plans. This is a new category of prototype plan that will enable employers to adopt nonstandardized plans that offer assurance that certain nondiscrimination requirements will automatically be satisfied. Rev. Procs. 89 9 and 89 13 supplemented, and Rev. Proc. 91-66 modified. (Sec. 601.201, S.P.R.) Rev. Proc. 93 10, 1993 1 C.B. 476. 168.21 Relief procedure; ERISA non-compliance enforcement program. A relief procedure is provided for certain employee benefit plans that were not amended timely to comply with ERISA. Authority to grant the relief is delegated to certain officials. Notice 80-7, 1980-1 C.B. 578. 168.22 Rulings; retroactive plan amendments. The procedure is provided by which a plan administrator or sponsor may file notice with and obtain approval from the Secretary of the Treasury for a retroactive plan amendment described in section 412(c)(8) and section 302(c)(8) of ERISA. Rev. Proc. 72-3 modified. (Sec. 601.201, S.P.R.; Sec. 412, 86 Rev. Proc. 79 18, 1979 1 C.B. 525. 168.23 Rulings and determination letters; extended reliance procedure. A procedure provides extended reliance for eligible individually designed plans, and extends the period of extended reliance already available to certain master and prototype (M&P) and regional prototype plans. Rev. Procs. 89 9 and 89 13 modified. (Sec. 601.201, S.P.R.) Rev. Proc. 93 9, 1993 1 C.B. 474. 168.24 Rulings and determination letters; issuance procedures. Procedures are provided for issuing rulings and determination, opinion, notification, and information letters and for entering into closing agreements on specific issues in employee plans and exempt organization matters. Rev. Proc. 80-24 superseded; Rev. Procs. 76-47 and 80-39 modified. Modified by Rev. Proc. 83-41. (Sec. 601.201, S.P.R.) Rev. Proc. 83 36, 1983-1 C.B. 763. 168.25 Rulings and opinion letters; master or prototype plans. Procedures are set forth pertaining to the issuance of opinion letters relating to master or prototype pension, annuity, and profitsharing plans under sections 401 and 403(a) of the Code and the status of related trusts or custodial accounts under section 501(a). Rev. Procs. 84-23, 84-83, and 87-18 superseded. Rev. Procs. 80-30 and 894 modified. 1.401 1, 1.403(a) 1, 1.501(a)-1. (Sec. 601.201, S.P.R.; Secs. 401, 403, 501, 86 Rev. Proc. 89-9, 1989-1 C.B. 780. 168.26 Rulings and opinion letters; master or prototype plans; compliance date. Notice 86-3 is modified by ending the time period within which certain individually designed pension, profit-sharing, stock bonus or annuity plans must be replaced by a master or prototype plan in order for an extended compliance date to be obtained under section 12 of Rev. Proc. 84-23. Notice 87 80, 1987-2 C.B. 388. 168.27 Sec. 6039D reporting requirements. Guidance is provided on the reporting requirements imposed on specified fringe benefit plans under section 6039D. Notice 90-24, 1990-1 C.B. 335. 168.28 Separate plans of commonly controlled corporations. Separate funding standard accounts must be established and maintained for separate defined benefit plans, even though the separate plans are all maintained by corporations that are commonly controlled. 301.6058 1. (Secs. 412, 6058; 86 Rev. Rul. 81 137, 1981-1 C.B. 232. 168.29 Waiver of tax on deficiency. The procedure for requesting a waiver of the 100 percent excise tax imposed on an accumulated funding deficiency is set forth. Rev. Proc. 80 24 modified. (Sec. 601.201, S.P.R.; Secs. 412, 4971, 86 Rev. Proc. 81-44 1981-2 C.B. 618. 168.30 Waivers requests; Omnibus Budget Reconciliation Act changes. Guidance is provided with respect to changes in the procedures and administrative requirements for requesting waivers made by the Omnibus Budget Reconciliation Act of 1987. Rev. Procs. 83-41 and 88 5 modified. (Sec. 601.201, S.P.R.; Sec. 412, 86 Rev. Proc. 88-29, 1988-1 C.B. 828. Civil Service annuities (See: Annuities and pensions) Contributions and benefits 170.1 Actuarial tables and interest factors. Corrections are made to amendments to the regulations relating to special rules for leases under the Economic Recovery Tax Act of 1981, tables for valuing annuities, tax shelter registration, substantiation with respect to certain means of transportation, and the effect of windfall profit tax overpayments on estimated income tax payments and penalties. 5c.168(f)(8) 5, 11.414(c) 2, 301.6111-1T. (Secs. 168, 414, 6111; 86 Notice 85 9, 1985 1 C.B. 432. 170.2 Anticipating change; maximum benefit limitations. A funding method that anticipates certain increases in the maximum dollar limitation is not unreasonable merely because of that anticipation. 1.404(a)-14, 1.412(c)(3)-1, 1.415-5. (Secs. 404, 412, 415; 86 Rev. Rul. 81-215, 1981 2 C.B. 106. 170.3 Attainment of age in determining benefits. The Service will issue proposed regulations under sections 9201 9204 of the Omnibus Budget Reconciliation Act of 1986 (OBRA 1986) that will, in general, provide that no year of service (including years of service before the effective date of the OBRA 1986 provisions) maybe disregarded because of the attainment of any age in determining benefits payable to employees from certain employee benefit plans. Notice 88-25, 1988-1 C.B. 495. 170.4 Cash or deferred arrangements; effective dates. Guidance is provided regarding the effective dates for certain provisions addressed in the final and proposed regulations concerning cash or deferred arrangements. Notice 88-127, 1988-2 C.B. 538. 170.5 Continued accruals beyond normal retirement age. The Service will issue final regulations under the continued benefit accrual provisions of the Omnibus Budget Reconciliation Act of 1986, that will generally provide that no year of service (including years of service before 1988) may be disregarded because of age in determining a participant s benefit plan for plan years beginning after 1987. Notice 88-126, 1988-1 C.B. 538. 170.6 Contributions; discontinuance. The failure of an employer to make contributions to its profit-sharing plan for five consecutive years due solely to the absence of current or accumulated earnings or profits is not a complete discontinuance of contributions within the meaning of section 411(d)(3) in a situation in which the employer is required to resume contributions as soon as it does have profits. Rev. Rul. 74-419 superseded. 1.404-1, 1.411(d)-2. (Secs. 401, 411; 86 Rev. Rul. 80-146, 1980 1 C.B. 90. 170.7 Contributions; limitation. In determining the deduction limitations for employer contributions to a qualified profit-sharing plan, in eluding the computation of credit carryovers and contribution carryovers, the definition of compensation provided in regs. 1.404(a)-9(b) and 1.404(a) 13(a) applies regardless of the definition of compensation used in the plan. Rev. Rul. 71-542 superseded. 1.404(a)-9. (Sec. 404, 86 Rev. Rul. 80-145, 1980-1 C.B. 89. 170.8 Cost-of-living adjustment; dollar limitations. The cost-of-living adjustments applicable to dollar limitations on benefits under qualified defined benefit pension plans and to other provisions affecting such plans are set forth. Notice 90-17, 1990-1 C.B. 327. 170.9 Cost-of-living adjustment; dollar limitations; 1991. The cost-of-living adjustments applicable to dollar limitations on benefits under qualified defined benefit pension plans and to other provisions affecting such plans are set forth. Notice 91 18, 1991 1 C.B. 320. 170.10 Cost-of-living adjustment; dollar limitations; 1992. The cost-of-living adjustments applicable to dollar limitations on benefits under qualified defined benefit pension plans and to other provisions affecting such plans are set forth. Notice 92 39, 1992-2 C.B. 370. 170.11 Deduction for contributions of an employer. Guidance is issued concerning the application of section 404(a)(6) of the Code to contributions to a cash or deferred arrangement under section 401(k) or to a defined contribution plan as matching contributions, where such contributions are attributable to compensation earned by plan participants after the end of the taxable year. (Sec. 404, 86 Rev. Rul. 90-105, 1990-2 C.B. 69. 170.12 Direct transfers. A direct transfer between section 403(b) investment vehicles does not constitute an actual distribution under section 403(b)(1) of the Code. Rev. Rul. 73-124 revoked. 1.403(b)-1. (Sec. 403, 86 Rev. Rul. 90-24, 1990-1 C.B. 97. 170.13 Discrimination; benefits offset; separate nonqualitied plan. The benefits under a pension plan that provides disability benefits are discriminatory if the disability benefits are reduced by the benefits paid under a separate nonqualified disability insurance arrangement of the employer that provides benefits that are equal to 75 percent of an employee s compensation, but are limited to $500 monthly. Rev. Rul. 71-578 superseded. 1.401-4. (Sec. 401, 86 Rev. Rul. 81 33, 1981 1 C.B. 173. 170.14 Discrimination; elective contributions as basis for pension benefit computation. Inclusion of elective contributions under a qualified cash or deferred arrangement as compensation in a defined benefit pension plan does not cause the pension plan to be discriminatory within the meaning of section 401(a)(4); exclusion of the elective contributions would not cause the plan to be discriminatory. Rev. Rul. 59 13 amplified. 1.401-4. (Sec. 401, 86 Rev. Rul. 83-89, 1983-1 C.B. 88. 170.15 Discrimination; officer acting in nominal capacity. An employee who was given the title of assistant secretary-treasurer merely to qualify the employee to sign checks in the absence

of superior officers and to affix and attest to the corporate seal when necessary and who actually performed these duties on only a few occasions, but otherwise had no voice in the management or administration of the corporation, is not considered an officer for purposes of section 401(a)(4) and 410(b). Rev. Rul. 68 300 superseded. 1.401-3, 1.401-4, 1.410(b)-1. (Secs. 401, 410; 86 Rev. Rul. 80-314, 1980-2 C.B. 152. 170.16 Effect of maximum benefit limitations. Situations illustrate the effect of section 415 maximum benefit limitations on minimum funding requirements and maximum deductible limits. 1.401(a)-14, 1.412(c)(3)-1, 1.415-5. (Secs. 404, 412, 415; 86 Rev. Rul. 81-195, 1981 2 C.B. 104. 170.17 Excess earnings. A defined benefit pension plan, under which a participant receives any balance in the participant s individual account resulting from excess earnings derived from trust assets, in addition to the benefit specified in the plan, does not qualify under section 401(a). 1.401-1, 301.7805-1. (Secs. 401, 7805; 86 Rev. Rul. 78 403, 1978-2 C.B. 153. 170.18 Excess earnings. A discussion is presented of the application of section 415 to a defined benefit pension plan, under which a participant receives any balance in the participant s individual account resulting from the crediting of excess earnings derived from trust assets, in addition to the benefit specified in the plan. (Secs. 414, 415; 86 Rev. Rul. 78-405, 1978 2 C.B. 161. 170.19 Excise tax; nondeductible employer contributions. Nondeductible employer contributions that were outstanding as of the end of an employer s taxable year beginning before January 1, 1987, are not subject to the excise tax on nondeductible employer contributions imposed under section 4972 of the Code. Notice 87-37, 1987-1 C.B. 499. 170.20 Extension of time for amending plans. The time by which certain employee retirement plans must be amended to comply with the regulations issued under section 415 is extended. The 415 transition period shall not apply in those situations in which it would provide less time for adopting plan amendments than is provided by the general rule. Notice 81 2, 1981-1 C.B. 613; Notice 81-10, 1981-28 I.R.B. 16. 170.21 Government pick-up plan. A situation illustrates the criteria for determining if contributions designated as employee contributions to a governmental plan are picked up within the meaning of section 414(h)(2) of the Code and, thus, whether such contributions are excludable from the gross income of the employee. (Sec. 414; 86 Rev. Rul. 87 10, 1987-1 C.B. 136. 170.22 Government pick up plans. Contributions of a school district that assumes and pays, or picks up, the required contributions of its teachers to the qualified state pension plan are employer contributions to the plan that are excludable from employees wages for purposes of income tax withholding and from gross income until subsequent distribution or availability to the employees. 1.402(a) 1. Distinguished by Rev. Rul 81-35. (Secs. 402, 414, 3401; 86 Rev. Rul. 77-462, 1977 2 C.B. 358. 170.23 Government pick up plans. Situations illustrate the application of criteria for determining if employee contributions to a governmental plan are picked up by an employer and whether such contributions are excludable from sharing, and stock bonus plans satisfy the limitations of section 415. Modified to extend to the later the gross income of the employee. Rev. Rul. 77-462 distinguished. (Sec. 414, 86 of December 31, 1976 or the adoption date of the Rev. Rul. 81 35, 1981 1 C.B. 255; Rev. Rul. first amendment conforming the existing plan to 81-36, 1981-1 C.B. 255. ERISA the period for adopting a limitation year without the adoption being considered a change in 170.24 Integration with social security. Covered compensation tables reflecting the social Rev. Rul. 79 5. (Sec. 415. 86 the limitation year. Rev. Rul. 75-481 modified by security taxable wage base for 1982 are supplied. Rev. Rul. 75-481, 1975 2 C.B. 188; Rev. Rul. Notice 82-2, 1982-1 C.B. 353. 77 24, 1977 1 C.B. 122. 170.25 Integration with social security; guides. Application of Rev. Rul. 71-446, which provides guidelines for determining whether retirement plans properly integrate with benefits provided by social security, is clarified to reflect changes enacted by the Social Security Amendments of 1977. Rev. Rul. 71-446 clarified. 1.401-3. (Sec. 401, 86 Rev. Rul. 78 92, 1978-1 C.B. 118. 170.26 Integration with social security; guides; qualification; discrimination; defined contribution plans. Rules are provided for complying with section 401(1) in determining compliance with section 401(a)(4) with respect to a defined contribution plan. Rev. Rul. 81 202 modified. (Sec. 401, 86 Rev. Rul. 83-110, 1983-2 C.B. 70. 170.27 Integration with unemployment compensation. Benefits provided under a qualified employee pension plan may not be offset by unemployment compensation benefits. Rev. Rul. 68-243 distinguished. 1.401-1. (Sec. 401, 86 Rev. Rul. 78 178, 1978 1 C.B. 117. 170.28 Interest rates; computing present values and plan benefits. Sponsors of defined benefit plans are provided guidance in complying with sections 411(a)(11)(B) and 417(e)(3), that limit the interest rate that may be used under a defined benefit plan for computing the present values and amounts of certain plan benefits. Notice 87-20, 1987-1 C.B. 456. 170.29 Leased employees. Guidelines under section 414(n) set forth how leased employees are to be treated for certain employee benefit plan purposes. (Sec. 414, 86 Notice 84-11, 1984 2 C.B. 469. 170.30 Limitation year; more than two plans. Rules are set forth for compliance with maximum benefit and contribution limits in the case where an employer wants to maintain several employee benefit plans with different limitation years. Rev. Rul. 75-481 modified. (Sec. 415, 86 Rev. Rul. 79 5, 1979 1 C.B. 165. 170.31 Limitations; actuarial adjustments; defined benefit plans. Adjustments made in accordance with reasonable assumptions, including those in accordance with the rules in Rev. Rul. 71-446, Rev. Rul. 76-47, or the proposed revenue ruling in Announcement 78 96 will meet the requirements for making actuarial adjustments required in applying the limitations on benefits under section 415(b)(1). (Sec. 415, 86 Rev. Rul. 80-253, 1980-2 C.B. 159. 170.32 Limitations; change in benefit structure. A change in benefit structure under a plan adopted on or after August 3, 1992, will not be subject to the 10-year-phase-in limitation of section 415(b)(5)(D). Guidance is provided on the application of section 415(b)(5)(D) for amendments adopted before that date. Notice 89-45 modified and revoked. 1.404(a) 14. (Sec. 601.601, S.P.R.; Secs. 404, 415, 86 Rev. Proc. 92-42, 1992 1 C.B. 872. 170.33 Limitations; guidelines. Guidelines are presented for determining whether the contributions or benefits under employee pension, profit- 170.34 Limitations; guidelines. Guidance is provided with respect to the effect of certain provisions of the Tax Reform Act of 1986 dealing principally with the new limitations on contributions and benefits under section 415 of the Code. Notice 87 21, 1987 1 C.B. 458. 170.35 Limitations; TEFRA; questions and answers. Guidance is provided in the form of questions and answers relating to the amendment of the limitations on benefits and contributions under qualified retirement plans by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Notice 83-10, 1983-1 C.B. 536. 170.36 Limitations; TEFRA amendments; guidelines. Sample language is provided to conform master and prototype plans to limitations on contributions and benefits under section 415 of the Code as amended by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Notice 83-11, 1983 2 C.B. 410. 170.37 Mandatory employee contributions. Mandatory employee contributions to a defined benefit pension plan shall be treated as a separate defined contribution plan for purposes of applying tbe limitations imposed by section 415 of the Code but shall not be considered a separate defined contribution plan for purposes of the $10,000 limitation provided in section 3.03 of Rev. Rul. 75-481. (Sec. 415, 86 Rev. Rul. 78 57, 1978 1 C.B. 128. 170.38 Mandatory employee contributions; funded by group deferred annuity. A defined benefit plan that is funded by a group deferred annuity and that provides for mandatory employee contributions, experience dividends, the offsetting of employer contributions by the mandatory employee contributions, and, on separation from service, the computation of the lump sum attributable to employee contributions with 3 1/2 percent interest is not a plan described in section 414(k). (Sec. 414, 86 Rev. Rul. 79 259, 1979 2 C.B. 197. 170.39 Mandatory retirement age. An amendment to a qualified plan, solely to increase or eliminate a mandatory retirement age provision, will not, by itself, adversely affect qualification. However, such an amendment could interact with other plan provisions to result in discrimination, in failure to satisfy the vesting or accrued benefit requirements, or in exceeding the limitations under section 415. 1.401-4, 1.411(b) 1, 1.415-3. (Secs. 401, 411, 415; 86 Rev. Rul. 81 210, 1981 2 C.B. 89. 170.40 Medicare Catastrophic Coverage; Maintenance of Effort provision; refunds paid or benefits received. Guidance is provided to employers and Medicare beneficiaries regarding the tax treatment and reporting requirements for refunds paid or benefits received under the Maintenance of Effort provision of the Medicare Catastrophic Coverage Act of 1988 (Pub. L. 100-360). Notice 90-2, 1990-1 C.B. 302. 170.41 Multiemployer benefit plan; audit of employer s records by trustee. An employer who participates in a multiemployer benefit plan that is governed by the Employee Retirement Income Security Act of 1974 (ERISA) must allow the plan trustees to conduct an audit involving the

records of employees whom the employer denies are participants in the plan. (Sec. 413, 86 Central States, Southeast & Southwest Areas Pension Fund, 472 U.S., Ct. D. 2032, 1985-2 C.B. 139. 170.42 Offset of workman s compensation. The offset of benefits payable under a qualified employee pension plan by benefits under workmen s compensation laws does not contravene the nonforfeiture provisions of the Employee Retirement Income Security Act of 1974. 1.411(a) 4. (Sec. 411, 86 Alessi, U.S., Ct. D. 2007, 1981-1 C.B. 219. 170.43 Partnership; cash or deferred arrangements; deduction for elective contributions. Limited relief is provided to certain partnership plans that failed to make the election provided in Notice 88 127, 1988 2 C.B. 538. Under certain conditions, the plan will be treated as containing a qualified cash or deferred arrangement under section 401(k). (Sec. 601.201, S.P.R.) Rev. Proc. 91-47, 1991-2 C.B. 757. 170.44 Qualified joint and survivorship annuities. The Service will follow the BBS Associates, Inc. decision that invalidated certain parts of the regulations under section 401(a)(11). Until the regulations are amended, guidance is provided to facilitate the adoption and amendment of retirement plans and submission of those plans for advance determination letters. Notice 82-4, 1982-1 C.B. 356. 170.45 Recordkeeping and reporting; fringe benefit items. Guidance is provided to employers and employees concerning the 1989 recordkeeping and reporting requirements for certain fringe benefit items. Notice 89-110, 1989-2 C.B. 447. 170.46 Recordkeeping and reporting fringe benefit items; 1991. Guidance is provided to employers and employees concerning the 1991 recordkeeping and reporting requirements for the valuation of employer-paid fuel. Notice 91-41, 1991-2 C.B. 638. 170.47 Reporting requirements; Form 1099-R. Filers of Form 1099-R are given guidance concerning the proper reporting of employee contributions on that form. (Sec. 601.201, S.P.R.) Rev. Proc. 92-86, 1992-2 C.B. 495. 170.48 Reporting requirements; 1988 and later years. Employers and plan administrators will be subject to new reporting requirements in 1988 and later years in connection with excess deferrals, excess contributions and excess aggregate contributions under plans described in sections 401(a), 401(k), 403(a), 403(b), and /or 408(k)(6). Notice 87-77, 1987-2 C.B. 385. 170.49 Retirement before age 65. A defined benefit pension plan will not fail to qualify merely because it provides for a normal retirement age of less than 65. However, retirement benefits commencing prior to age 55 may not exceed the limitation provided in section 415(b)(1)(A) as adjusted. Rev. Rul. 71-147 modified. 1.401-1, 1.411(a)-7. (Secs. 401, 411, 415; 86 Rev. Rul. 78-120, 1978-1 C.B. 117. 170.50 Return of employer contributions. Circumstances are discussed under which a qualified pension, profit-sharing, or stock bonus plan may permit reversion of employer contributions, without adversely affecting the plan s qualified status. 1.401 2. (Sec. 401, 86 Rev. Rul. 77 200, 1977-1 C.B. 98. 170.51 Reversions to employer; defined benefit plan. A procedure is set forth by which the administrator or sponsor of a qualified defined benefit plan may satisfy the requirement that a deduction under section 404 of the Code be disallowed, thereby fulfilling a condition under which a contribution may revert to the employer without adversely affecting the plan s qualified status. Rev. Proc. 89-35 superseded. (Sec. 601.201, S.P.R.) Rev. Proc. 90-49, 1990-2 C.B. 620. 170.52 Safe harbor plans. This notice describes certain proposed changes to the general requirements for safe harbor plans in the final regulations under section 401(a)(4) and section 414(s). Notice 92-31, 1992-2 C.B. 359. 170.53 Safe harbor plans; permitted disparity. A safe harbor for PIA offset plans is proposed to be added to the regulations under sections 401(a)(4) and 401(1). Notice 92-32, 1992-2 C.B. 362. 170.54 Section 89 transitional rules. Additional transitional relief is provided to October 1, 1989, for testing employer plans for compliance with the nondiscrimination rules of section 89(a), and the reasonable notice requirement of section 89(k). Notice 89-65, 1989-1 C.B. 721. 170.55 Section 89 transitional rules. Additional transitional relief is provided to December 1, 1989, for testing employer plans for compliance with the nondiscrimination rules of section 89(a), and the reasonable notification requirement of section 89(k). Notice 89 65 modified. Notice 89-100, 1989-2 C.B. 434. 170.56 Section 457 application; eligible defered compensation plans. Additional guidance is provided on the application of section 457 of the Code to elective and nonelective vacation, sick leave, and other plans. Notice 88-68, 1988-1 C.B. 556. 170.57 Spinoffs; termination basis for purposes of transfers and spinoffs. A defined benefit plan may fail to satisfy the spinoff requirements under section 414(1) if plan benefits included under section 411(d)(6)(B) or required under section 417(c) are not included in the determination of benefits on a termination basis within the meaning of section 1.414(1) 1(b)(5) and (n)(1) of the regulations. 1.411(d) 3, 1.414(1) 1. (Secs. 411, 414; 86 Rev. Rul. 86-48, 1986-1 C.B. 216 170.58 Suspension of benefits; plan amendments. Guidance is provided on the amendments that may be necessary to conform qualified retirement plans to the suspension of benefit regulations issued by the Department of Labor. If an amendment is required, the time for doing so is extended. Notice 82-23, 1982-2 C.B. 752. 170.59 Suspension of benefits due to reemployment. Four examples illustrate whether the requirements of sections 401(a)(14) and 411(a)(3)(B) are satisfied under defined benefit plan provisions that suspend benefits due to reemployment of the participant. 1.401(a)-14, 1.411(a)-4. (Secs. 401, 411; 86 Rev. Rul. 81-140, 1981-1 C.B. 180. Deductions 172.1 Anticipating change; maximum benefit limitations. A funding method that anticipates certain increases in the maximum dollar limitation is not unreasonable merely because of that anticipation. 1.404(a)-14, 1.412(c)(3)-1, 1.415-5. (Secs. 404, 412, 415; 86 Rev. Rul. 81-215, 1981-2 C.B. 106. 172.2 Contributions; accumulated dividends earned on insurance contracts. The accumulation of dividends earned on insurance and annuity Employee plans contracts in the administration of an employees pension plan, in a case in which the employer pays the full premium charged by the insurer, will not necessarily disqualify the plan, but the allowable deduction for the annual contribution by the employer must be reduced by the amount of dividends earned in the current or the next preceding year. 1.401-1, 1.404(a)-3. (Secs. 401, 404; 86 Rev. Rul. 60-33, 1960-1 C.B. 152. 172.3 Contributions; actuarial assumptions; normal retirement age. An actuarial assumption that employees retire at the normal retirement age specified in a plan, ignoring either the frequency of early retirement or the fact that employees normally retire at an age above the age specified, could cause the actuarial assumptions, in the aggregate, not to be reasonable and could result in failure of the plan to satisfy the minimum funding requirements or in the computation of amounts not currently deductible. (Secs. 404, 412; 86 Rev. Rul. 78 331, 1978-2 C.B. 158. 172.4 Contributions; affiliated employers. Methods are provided for allocating contributions, for the purpose of determining deductions under section 404(a)(3), where affiliated employers maintain a profit sharing plan with a contribution formula based on consolidated net income. P.S. No. 51-Part B superseded. 1.404(a) 9. (Sec. 404, 86 Rev. Rul. 70-532, 1970 2 C.B. 95. 172.5 Contributions; affiliated group. Contributions to a profit-sharing trust established by an affiliated group of corporations are deductible by members of the group on behalf of each other in any year that the trust meets the qualification requirements under section 401(a) and is exempt under section 501(a). This would apply even though unrelated corporations adopted the same plan and trust, or a separate trust. 1.404(a)-10. (Sec. 404, 86 Rev. Rul. 57-388, 1957 2 C.B. 270. 172.6 Contributions; affiliated group. Guides are provided for determining the amount of make-up contributions which members of an affiliated group of corporations may deduct where one member is prevented from contributing to a qualified profit-sharing plan and the group does not file a consolidated return. 1.404(a) 10. (Sec. 404, 86 Rev. Rul. 67-214, 1967 2 C.B. 160. 172.7 Contributions; amounts paid to separated foreign employees. Where an accrual basis employer doing business in a foreign country is required by the laws of that country to make payments, based on years of service, to its employees or their beneficiaries after the employees retirement, death, or other separation from the service, such payments are made under a plan of deferred compensation and may be deducted only to the extent provided by section 404(a)(5) in the taxable vear when actually paid. 1.162-10, 1.404(a)-12. (Secs. 162, 404; 86 Rev. Rul. 67 215, 1967 2 C.B. 162. 172.8 Contributions; application of carryover provisions. A corporation which made no contribution to its qualified profit-sharing plan in a taxable year in which it had available a contribution carryover from the preceding year may not deduct, under section 404(a)(3)(A), an amount in excess of the primary limitation referred to in reg. 1.404(a) 9(c), The application of the credit carryover and contribution carryover provisions of the regulations is illustrated. 1.404(a)-9. (Sec. 404, 86 Rev. Rul. 73 608, 1973-2 C.B. 147. 172.9 Contributions; auxiliary pension fund. The qualification of an employees plan will not be affected by the postponement of an employer s current year contribution to an auxiliary fund, if

certain conditions are met. The payment of the postponed contribution, in a subsequent year, will be allowed as a deduction. (Secs. 401, 404; 86 Rev. Rul. 55-480, 1955 2 C.B. 227. 172.10 Contributions; book treatment of costs. The deductibility of an employer s contribution to a qualified employees pension plan is governed by section 404 regardless of the employer s treatment of pension costs for book and financial statement purposes. 1.404(a) 1. (Sec. 404, 86 Rev. Rul. 68 34, 1968 1 C.B. 181. 172.11 Contributions; carryover; former tax-exempt organization. An organization, now taxable, may not carry over and deduct excess contributions it made to its employees pension plan at a time when the organization itself was tax exempt. 39.23(p) 1, 1.404(a) 7. (Sec. 23, 39 Code; Sec. 404, 86 Rev. Rul. 63-102, 1963-1 C.B. 96. 172.12 Contributions; carryover; plan liquidated. If a qualified employees profit-sharing trust has been liquidated by the employer, no contribution carryover may be allowed as a deduction in any taxable year subsequent to the year in which the trust was liquidated. 39.23(p) 10. (Sec. 23(p), 39 Code; Sec. 404, 86 Rev. Rul. 54-270, 1954-2 C.B. 97. 172.13 Contributions; carryover to estate. The estate of a sole proprietor may not claim a deduction for any part of a contribution made by the sole proprietor to a qualified and tax-exempt employees pension trust with regard to past service credits, which had not been deducted by the sole proprietor prior to his death. 1.404(a)-1. (Sec. 404, 86 Rev. Rul. 58 193, 1958 1 C.B. 208. 172.14 Contributions; compensation paid terminating employee. Where a profit-sharing plan provides that a terminating employee does not share in the employer contributions for the taxable year in which such termination occurs, the compensation paid such terminating employee in such taxable year may not be included in the total compensation paid or accrued during the taxable year for the purpose of determining the limitation on deductions for employer contributions. 1.404(a)-9. (Sec. 404, 86 Rev. Rul. 65-295, 1965 2 C.B. 148. 172.15 Contributions; contiguous country foreign corporations. Where a domestic parent corporation, which completely owns or controls subsidiaries in a contiguous country, elects to treat such subsidiaries as domestic corporations, then the subsidiaries and the parent corporation, as domestic corporations and members of an affiliated group, may each make deductible contributions on behalf of the other s employees to the employees profit-sharing trust of the affiliated group if such trust both qualifies and is exempt. 1.404(a)-10. (Sec. 404, 86 Rev. Rul. 58 392, 1958-2 C.B. 154. 172.16 Contributions; corporate reorganization; consolidation of plans. A corporate reorganization and consolidation of two qualified pension plans will not affect the deductibility of contributions by the predecessor corporation prior to the reorganization. The direct transfer of funds from the trust of the predecessor s plan to the trust of the successor s plan will not result in tax able income to the successor corporation. Rev. Rul. 58-406 superseded. 1.361 1, 1.404(a)-1. (Secs. 361, 404; 86 Rev. Rul. 82-60, 1982 1 C.B. 63. 172.17 Contributions; credits and carryovers. The position stated in Rev. Rul. 70 185 with respect to the credit and contribution carryover provisions in section 404(a)(3)(A) for pay ments by an employer to an exempt stock bonus or profit-sharing trust are restated in view of the enactment of ERISA. Rev. Rul. 70 185 superseded. 1.404(a) 9. (Sec. 404, 86 Rev. Rul. 83-48, 1983-1 C.B. 93. 172.18 Contributions; current payment profit-sharing plan; affiliated group. Amounts paid under an employees current payment profit-sharing plan may be deductible in the year of accrual even though paid shortly after the close of the taxable year. Each member of an affiliated group may deduct only the payment made by it to its own employees from its own profits. The affiliated group may not claim the benefits of section 404(a)(3)(B). 1.404(a)-10. (Secs. 162, 404; 86 Rev. Rul. 57-88, 1957-1 C.B. 88. 172.19 Contributions; discontinued; reversions under nontrusteed annuity plan. Sur-plus funds may revert to the employer upon permanent discontinuance of contributions under a nontrusteed annuity plan funded by a participating group annuity contract without affecting the deductibility of contributions under section 404(a)(2) if all other requirements are met. 1.401 2, 1.404(a)-8. (Secs. 401, 404; 86 Rev. Rul. 71-297, 1971-2 C.B. 213. 172.20 Contributions; dividends paid; reasonable assumptions. Where total gains, including annual dividends paid by an insurance company under a typical group deferred annuity contract, have been consistently substantial for a period of years and are likely to recur in the future, the dividends must be taken into account along with gains from other sources in determining the acceptability of assumptions for the purpose of computing deductible limits. 1.404(a) 3. (Sec. 404, 86 Rev. Rul. 72-277, 1972-1 C.B. 120. 172.21 Contributions; during extended period for tiling return. Where a corporation on the accrual method of accounting has obtained an extension of time for filing its income tax return, a contribution paid to its qualified employees trust within such extended period for filing will be deemed to be timely regardless of when the return is actually filed. 1.404(a)-1. (Sec. 404, 86 Rev. Rul. 66-144, 1966-1 C.B. 91. 172.22 Contributions; effect of maximum benefit limitations. Situations illustrate the effect of section 415 maximum benefit limitations on minimum funding requirements and maximum deductible limits. 1.401(a)-14, 1.412(c)(3)-1, 1.415-5. (Secs. 404, 412, 415; 86 Rev. Rul. 81-195, 1981-2 C.B. 104. 172.23 Contributions; employee benefit trust funds. Employers may deduct as ordinary and necessary business expenses the payments required by union-industry association collective bargaining agreements to a workers health facility and recreational center trust fund or to a fund to maintain, through licensed insurance carriers, group term life, accident and health, hospitalization, and medical and surgical insurance for the benefit of covered employees and their families. 1.162-10, 1.404(a)-1. (Secs. 162, 404; 86 Rev. Rul. 77-406, 1977-2 C.B. 56. 172.24 Contributions; employer s promissory note. The issuance and delivery by an accrual basis taxpayer of its fully secured promissory notes to the trustees of its qualified employees profit-sharing plan was not a contribution to the plan deductible under section 404. 1.404(a)-1. (Sec. 404, 86 Williams, 429 U.S. 569, Ct. D. 1984, 1977-1 C.B. 109. 172.25 Contributions; employers term promissory note. The delivery of an employer s own term promissory note to an employees trust does not constitute payment for purposes of section 404(a), and the issuance of such a note to a plan is a prohibited transaction. Rev. Rul. 71-95 superseded. 1.404(a) 1. (Secs. 404, 4975; 86 Rev. Rul. 80-140, 1980-1 C.B. 89. 172.26 Contributions; escrow fund. Payments by an employer into an escrow fund pending negotiations with a labor union to establish a pension plan are not contributions or payments to or under a qualified plan. A contribution is deemed to be made at the time the funds are irrevocably turned over to the trustee of a qualified plan or, in the event the plan is not so qualified, if the rights of the employees in the contributions are nonforfeitable at the time so paid. 39.23(p)-11. (Sec. 23(p), 39 Code; Sec. 404, 86 Rev. Rul. 55 310, 1955 1 C.B. 45. 172.27 Contributions; excess; investment in employer securities. The borrowing of capital by a trust and investing it in securities of, or entering into transactions with the employer who established and contributed to the trust, or an entity closely related to the employer, does not disqualify the trust. However, amounts paid the trust with respect to the investments or transactions by the employer or related entity, to the extent they exceed the limitations under section 404(a), are not deductible under other sections of the Code if they are not bona fide but intended to circumvent the limitations imposed. Rev. Rul. 46 superseded. 1.401-1, 1.404(a)-9. (Secs. 401, 404; 86 Rev. Rul. 71-311, 1971 2 C.B. 184. 172.28 Contributions; forfeitable rights. The Service will not follow the Russell Manufacturing Co. decision, holding that a taxpayer may deduct amounts of compensation paid out of irrevocable trusts to employee-beneficiaries, even though the employees rights were forfeitable when the contributions were made to the trusts. 29.23(p)-11, 1.404(a) 12. (Sec. 23(p), 39 Code; Sec. 404, 86 Rev. Rul. 59-383, 1959-2 C.B. 456. 172.29 Contributions; full funding limitation. Guidance is provided on how the full funding limitation affects the maximum deductible contributions to a defined benefit plan. Rev. Ruls. 64-159 and 69-255 obsoleted. 1.404(a)-14. (Sec. 404, 86 Rev. Rul. 82-125, 1982-1 C.B. 64. 172.30 Contributions; insurance coverage; active and retired employees. A corporation s nonrefundable contribution to an employees trust to provide group health and life insurance for both active and retired employees is deductible under section 162. 1.162 10, 1.404(a) 1. (Secs. 162, 404; 86 Rev. Rul. 69-478, 1969 2 C.B. 29. 172.31 Contributions; joint plan of employers. Where two or more employers maintain a qualified joint pension or annuity plan for their employees, deductions from gross income of each employer must be based on its separate costs determined by separate computations if such a method is feasible. Where separate computations are not feasible, some other method of distributing costs, such as allocation in proportion to participating payrolls, may be acceptable if it is reasonably and consistently followed. Examples illustrate methods of allocating the costs. P.S. No. 51-Part A superseded. 1.404(a)-3. (Sec. 404, 86 Rev. Rul. 69 525, 1969 2 C.B. 102. 172.32 Contributions; joint ventures. A corporation has a qualified profit-sharing plan which permits continued eligibility and participation by

employees assigned temporarily to various joint ventures into which the corporation enters. In computing the limitation on deductible contributions, the corporation may take into account its distributive share of compensation paid by a joint venture, in which it is participating, to employees covered by the corporation s profit-sharing plan. 1.404(a)-9. (Sec. 404, 86 Rev. Rul. 60-379, 1960-2 C.B. 156. 172.33 Contributions; land to pension trust with lease-back. Taxpayer conveyed land to its employees pension trust, leased the land back for 20 years at 6 percent of its agreed upon value which was less than its fair rental value, entered into an option to repurchase the land at a price equal to the agreed upon value, and claimed a deduction for less than the fair market value. Held, taxpayer properly claimed a deductible contribution represented by a payment in kind rather than in cash. (Sec. 404, 86 Colorado National Bank, 30 T.C. 933, Acq., 1959-1 C.B. 3. 172.34 Contributions; life insurance employer funding own plan. Contributions made by a life insurance company as an employer, to itself as an insurer, to fund its own qualified annuity plan are, under certain conditions, deductible under section 404(a) to the same extent as if an unrelated employer was funding the same plan with that company. 1.404(a)-3. (Sec. 404, 86 Rev. Rul. 72-558, 1972-2 C.B. 228. 172.35 Contributions; limitation. The application of the limitations provided in section 404(a)(3)(A) for contributions to a profit-sharing plan is illustrated in a situation in which an employer made a contribution for one year after the time prescribed by section 404(a)(6) and for the following year made a timely contribution. Rev. Rul. 57-378 superseded. 1.404(a)-9. (Sec. 404, 86 Rev. Rul. 81 123, 1981-1 C.B. 207. 172.36 Contributions; limitation; compensation defined. In determining the deduction limitations for employer contributions to a qualified profit-sharing plan, including the computation of credit carryovers and contribution carryovers, the definition of compensation provided in regs. 1.404(a)-9(b) and 1.404(a) 13(a) applies regardless of the definition of compensation used in the plan. Rev. Rul. 71 542 superseded. 1.404(a) 9. (Sec. 404, 86 Rev. Rul. 80-145, 1980-1 C.B. 89. 172.37 Contributions; limitation; computation. Computation of the deductible limits of contributions, to a plan providing for pre-retirement death benefits and a retirement annuity funded by level-premium ordinary life insurance contracts and by an auxiliary fund. Rev. Rul. 67-427 superseded. 1.404(a)-6. (Sec. 404, 86 Rev. Rul. 734, 1973-1 C.B. 203. 172.38 Contributions; limitation; defined benefit plan. Examples are provided on how the deductible limit under section 404(a)(1)(A) for a defined benefit plan is determined within the meaning of reg. 1.404(a) 14. Rev. Ruls. 55-411, 57 89, and 70-30 obsoleted. 1.404(a)-14. (Sec. 404, 86 Rev. Rul. 84-62, 1984-1 C.B. 121. 172.39 Contributions; limitation; improper assumptions in computing costs. When the assumptions used in determining costs of an employees exempt pension trust for a taxable year for which a return has been filed were not proper, the methods and other factors used in determining costs and the method of determining the deductible limit shall not be changed for such taxable year except to the extent that the Commissioner also determines that the methods, factors, or limitations were not proper. 1.404(a) 3. (Sec. 404, 86 Rev. Rul. 67-365, 1967-2 C.B. 154. 172.40 Contributions; limitation; life insurance payable to trustee. Where an employees pension trust purchases for employees retirement income contracts which provide that upon the death of an employee the life insurance benefits under such contracts shall be paid to the trustee, who must apply such proceeds to the payment of subsequent premiums on behalf of the other employees, the contributions of the employer attributable to such insurance are not costs of the pension plan for the purpose of the limitations on contributions, and may not be currently deductible as such. Such nondeductible contributions may, however, be deducted in later years. P.S. No. 6 revoked. 39.23(p)4. (Sec. 23(p), 39 Code; Sec. 404, 86 Rev. Rul. 55-748, 1955-2 C.B. 234. 172.41 Contributions; limitation; method for valuing assets and interest rate. As a general rule, any asset valuation basis, including fair market value or cost, is acceptable for estimating the cost of a trusteed employee pension plan for use in determining the limitations on deductions for employer contributions if it is followed consistently and otherwise results in costs which are reasonable. The interest rate assumed for the purpose of estimating costs for use in determining the limitations on deductions for employer contributions to self-insured pension plans should be in line with the actual average yield over a recent period of years and should take account of the reasonableness of other assumptions used. Clarified to define employer s accrued liability. 1.404(a)-3. (Sec. 404, 86 Rev. Rul. 63-11, 1963 1 C.B. 94; Rev. Rul. 64-84, 1964-1 (Part 1) C.B. 164. 172.42 Contributions; limitation; reasonable assumption. Illustrations, providing guides for the deductibility of employer contributions to annuity plans, classify types of insured instruments to which Rev. Rul. 63 11 applies and explain the Service s position where it does not apply. 1.404(a)-3. (Sec. 404, 86 Rev. Rul. 72-557, 1972-2 C.B. 227. 172.43 Contributions; limitation; reasonable assumption; revaluation. Application of principles for determining whether actuarial assumptions used to compute employer pension plan costs to determine deductible limit of employer contributions are reasonable. 1.404(a) 3. (Sec. 404, 86 Rev. Rul. 71-459, 1971-2 C.B. 212. 172.44 Contributions; limitation; TEFRA; questions and answers. Guidance is provided in the form of questions and answers relating to the amendment of the limitations on benefits and contributions under qualified retirement plans by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Notice 83-10, 1983-1 C.B. 536. 172.45 Contributions; limitation; union-negotiated plan; 5-year contract. A union-negotiated pension plan for hourly paid employees that provides for a fixed rate of contributions and a definite benefit formula that does not involve employer discretion is a permanent program within the meaning of reg. 1.401 1(b)(2) even though the collective bargaining agreement is renegotiated after 5 years. The plan also meets the requirement that the benefits be definitely determinable and that the deduction limitations and minimum funding be based on the cost of those benefits. Rev. Rul. 70 257 superseded. 1.401-1, 1.404(a)-1. (Secs. 401, 404, 412; 86 Rev. Rul. 83-83, 1983-1 C.B. 86. 172.46 Contributions; limitations; union negotiated plan. The limitations contained in section 404(a)(1) apply to deductions for contributions made by employers to qualified employees pension or annuity plans established pursuant to union negotiated contracts that terminate upon the expiration of a stated period of time, including those plans that use the terminal funding method. In all cases, the limitations are, however, dependent upon the non-deferred compensation of employees covered under a particular plan or the costs with respect to employees covered under the plan, or both. In determining such limitations, there must first be a determination of which employees are considered covered under the plan. For purposes of making these determinations, examples are set forth in which the applicable principles are illustrated. P.S. No. 67 superseded. 1.404(a)-3. (Sec. 404, 86 Rev. Rul. 69-159, 1969-1 C.B. 133. 172.47 Contributions; limitation; unreasonable compensation paid. Methods are provided for determining the limitation on deductions claimed by an employer for contributions to an employees qualified profit-sharing or stock bonus plan in cases where it is concluded that the total compensation (deferred and nondeferred) paid to an employee for a taxable year is unreasonable or excessive. 1.162-8, 1.212-1, 1.404(a)-9. (Secs. 162, 212, 404; 86 Rev. Rul. 67-341, 1967 2 C.B. 156. 172.48 Contributions; limitation; valuation method. The frozen initial liability method of valuation, if properly modified, is acceptable for determining the deductible limit for contributions to an employees exempt pension trust. Optional terminology is discussed. 1.404(a) 6. (Sec. 404, 86 Rev. Rul. 65-310, 1965-2 C.B. 145. 172.49 Contributions; liquidated corporation; stockholder assumption of pension payments. A corporate liability for unpaid pensions assumed by former stockholders upon liquidation reduces the actual amount received by the former stockholders upon the corporate liquidation and either reduces the amount of gain or increases the amount of loss for each former shareholder. The corporation may not deduct the commuted value of the unpaid pensions in its final return. 1.162-10, 1.404(a)-1, 1.1001-1. (Secs. 162, 404, 1001; 86 Rev. Rul. 59-228, 1959-2 C.B. 59. 172.50 Contributions; make-up. A contribution, in addition to the regular contribution to a trust under a qualified money purchase pension plan made by an employer to make up for contributions missed in a previous year and the attributable earnings, is not deductible in full in the year paid. The make-up contribution must be deducted at a rate not to exceed ten percent a year under section 404(a)(1)(C) or deducted ratably over the remaining future service of each employee or such longer period as specified in section 404(a)(1)(B). 1.404(a)-6. (Sec. 404, 86 Rev. Rul. 74-350, 1974-2 C.B. 139. 172.51 Contributions; nonexempt educational benefit trust. Distributions from an educational benefit trust, established by a corporation to further the education of children of qualified employees, are includable in the gross income of the employees in the taxable year in which made in accordance with the vesting provisions of the plan; further, the corporation may take a deduction for contributions to the plan in the taxable years in which distributions are includible in the gross income of the employees. 1.162 1, 1.402(b) 1, 1.404(a)-1. (Secs. 83, 162, 402, 404; 86 Rev. Rul. 75-448, 1975-2 C.B. 55. 172.52 Contributions; nonexempt status for one taxable year. Exemption was denied to a qualified profit-sharing trust for the taxable year