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Rev. Rul. 1969-478 Document Info Printer

Revenue Rulings
Internal Revenue Service
 Revenue Ruling

Rev. Rul. 69-478

1969-2 C.B. 29

Sec. 162

Sec. 404

IRS Headnote

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 of the Code. 

Full Text

Rev. Rul. 69-478 

X corporation, under an employee benefit plan, is required to make
nonrefundable contributions to a group employee benefit trust. The
contributions to the trust are to provide for the payment to insurers for
group health insurance as well as to provide for group-term life insurance.
The plan covers not only eligible active employees but also eligible
retired employees. Contributions are made by the employer on a level basis
(actuarially determined) so that at the time of an employee's retirement
there is enough money in the fund to enable the trustee to continue to make
the premium payments on the contracted insurance. 

Held, the fact that some or all of the employees benefited under the plan
are retired does not require that the plan be considered a deferred
compensation plan governed by the provisions of section 404 of the Internal
Revenue Code of 1954. The plan remains an "employee" benefit plan
specifically excluded from the application of section 404(a) of the Code.
Section 1.404(a)-1(a)(2) of the Income Tax Regulations. The deductibility
of the required payments made by X under the plan is governed by section
162 of the Code and section 1.162-10 of the regulations. Compare Revenue
Ruling 69-382, page 28, this Bulletin, wherein premium payments to an
insurance company for group term life and health and accident coverage for
both active and retired employees are held to be deductible under section
162 of the Code.

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