Page:United States Statutes at Large Volume 68A.djvu/177

 CH. 1

NORMAL TAXES AND SURTAXES

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(d) CERTAIN EMPLOYEES' ANNUITIES.—Notwithstanding subsec-

tion (b) or any other provision of this subtitle, a contribution to a trust by an employer shall not be included in the gross income of the employee in the year in which the contribution is made if— (1) such contribution is to be applied by the trustee for the purchase of annuity contracts for the benefit of such employee; (2) such contribution is made to the trustee pursuant to a written agreement entered into prior to October 21, 1942, between the employer and the trustee, or between the employer and the employee; and (3) under the terms of the trust agreement the employee is not entitled during his lifetime, except with the consent of the trustee, to any payments under annuity contracts purchased by the trustee other than annuity payments. The employee shall include in his gross income the amounts received under such contracts for the year received as provided in section 72 (relating to annuities) except that section 72(e)(3) shall not apply. This subsection shall have no application with respect to amounts contributed to a trust after June 1, 1949, if the trust on such date was exempt under section 165(a) of the Internal Revenue Code of 1939. For purposes of this subsection, amounts paid by an employer for the purchase of annuity contracts which are transferred to the trustee shall be deemed to be contributions made to a trust or trustee and contributions applied by the trustee for the purchase of annuity contracts; the term "annuity contracts purchased by the trustee" shall include annuity contracts so purchased by the employer and transferred to the trustee; and the term "employee" shall include only a person who was in the employ of the employer, and was covered by the agreement referred to in paragraph (2), prior to October 21, 1942. (e) CERTAIN P L A N TERMINATIONS.—For purposes of subsection (a) (2), distributions made after December 31, 1953, and before January 1, 1955, as a result of the complete termination of a stock bonus, pension, or profit-sharing plan of an employer which is a corporation, if the termination of the plan is incident to the complete liquidation, occurring before the date of enactment of this title, of the corporation, whether or not such liquidation is incident to a reorganization as defined in section 368(a), shall be considered to be distributions on account of separation from service. SEC. 403. TAXATION OF EMPLOYEE ANNUITIES. (a) TAXABILITY OF BENEFICIARY U N D E R A QUALIFIED A N N U I T Y PLAN.—

(1) GENERAL RULE.—Except as provided in paragraph (2), if an annuity contracts purchased by an employer for an employee under a plan with respect to which the employer's contribution is deductible under section 404(a)(2), or if an annuity contract is purchased for an employee by an employer described in section 501 (c)(3) which is exempt from tax under section 501(a), the employee shall include in his gross income the amounts received under such contract for the year received as provided in section 72 (relating to annuities) except that section 72(e)(3) shall not apply. § 403(a)(1) 49012°—54

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