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PURPOSE
This revenue ruling modifies the rules for group trusts described in Rev. Rul. 81-100, 1981-1 C.B. 326, as clarified and modified by Rev. Rul. 2004-67, 2004-2 C.B. 28. The modifications revise the generally applicable rules for these group trusts and, if certain requirements are met, permit the participation in group trusts of custodial accounts under § 403(b)(7), retirement income accounts under § 403(b)(9), and governmental retiree benefit plans under § 401(a)(24). In addition, this revenue ruling provides related model language that may be used by group trusts to comply with these new provisions. This revenue ruling also modifies the transition relief provided in Rev. Rul. 2008-40, 2008-2 C.B. 166, relating to plans qualifying under section 1165 of the Puerto Rico Internal Revenue Code (Puerto Rico Code).
ISSUE
Under what conditions may the assets of qualified plans under § 401 (a), individual retirement accounts (IRAs) under § 408 (including Roth IRAs under §408A), and eligible governmental plans under § 457(b) be pooled in a group trust described in Rev. Rul. 81-100 with the assets of custodial accounts under § 403(b)(7), retirement income accounts under § 403(b)(9), and governmental plans under § 401(a)(24) without affecting the tax status of these entities or the group trust?
LAW AND ANALYSIS
Section 401 (a) provides that a trust created or organized in the United States and forming a part of a stock bonus, pension, or profit-sharing plan of an employer for the exclusive benefit of its employees or their beneficiaries is qualified if it meets certain requirements. Section 401(a)(1) provides that one of these requirements is that contributions be made to the trust by the applicable employer or employees, or both, for the purpose of distributing to such employees or their beneficiaries the corpus and income of the fund accumulated in accordance with such plan. Section 501 (a) provides, in part, that a trust described in § 401 (a) is exempt from income tax. Section 401(a)(2) provides, in part, that under each trust instrument it must be impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the plan and the trust, for any part of the corpus or income of the trust to be used for or diverted...