Page:United States Statutes at Large Volume 56 Part 1.djvu/890

 PUBLIC LAWS-CH. 619-OCT. 21, 1942 53 Stat. 67 . 26U.S.C.§165. Requirements. 53 Stat. 1383. 26 U.. C.C 1426 (a) (1). SEC. 162. PENSION TRUSTS. (a) EXEMPTION OF TRUsTs.- Section 165 (relating to employees' trusts) is amended to read as follows: "SEC. 165. EMPLOYEES' TRUSTS. "(a) EXEMPTION FROM TAX. - A trust forming part of a stock bonus, pension, or profit-sharing plan of an employer for the exclu- sive benefit of his employees or their beneficiaries shall not be taxable under this supplement and no other provision of this supplement shall apply with respect to such trust or to its beneficiary- "(1) if contributions are made to the trust by such employer, or employees, or both, for the purpose of distributing to such employees or their beneficiaries the corpus and income of the fund accumulated by the trust in accordance with such plan; "(2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees or their beneficiaries; "(3) if the trust, or two or more trusts, or the trust or trusts and annuity plan or plans are designated by the employer as constituting parts of a plan intended to qualify under this sub- section which benefits either- "(A) 70 per centum or more of all the employees, or 80 per centum or more of all the employees who are eligible to benefit under the plan if 70 per centum or more of all the employees are eligible to benefit under the plan, excluding in each case employees who have been employed not more than a minimum period prescribed by the plan, not exceeding five years, employees whose customary employment is for not more than twenty hours in any one week, and employees whose customary employment is for not more than five months in any calendar year, or "(B) such employees as qualify under a classification set up by the employer and found by the Commissioner not to be discriminatory in favor of employees who are officers, shareholders, persons whose principal duties consist in supervising the work of other employees, or highly com- pensated employees; and "(4) if the contributions or benefits provided under the plan do not discriminate in favor of employees who are officers, share- holders, persons whose principal duties consist in supervising the work of other employees, or highly compensated employees. "(5) A classification shall not be considered discriminatory within the meaning of paragraphs (3) (B) or (4) of this sub- section merely because it excludes employees the whole of whose remuneration constitutes 'wages' under section 1426 (a) (1) (relating to the Federal Insurance Contributions Act) or merely because it is limited to salaried or clerical employees. Neither shall a plan be considered discriminatory within the meaning of such provisions merely because the contributions or benefits of or on behalf of the employees under the plan bear a uniform rela- tionship to the total compensation, or the basic or regular rate of compensation, of such employees, or merely because the con- tributions or benefits based on that part of an employee's remu- neration which is excluded from 'wages' by section 1426 (a) (1) 862 [56 STAT.

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