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SEC. 401—Continued
(c)-(g) (added 1962)—Continued

(f) CERTAIN CUSTODIAL ACCOUNTS.

“(1) TREATMENT AS QUALIFIED TRUST.–For purposes of this title, a custodial account shall be treated as a qualified trust under

title, section, in custodistitute a quas

(A) such custodial account would, except for the fact that it is not a trust, constitute a qualified trust under this section;

(B) the custodian is a bank (as defined in subsection (d)(1));

(C) the investment of the funds in such account (including all earnings) is to be made .

"(i) solely in regulated investment company stock with respect to which an employee is the beneficial owner, or

"(ii) solely in annuity, endowment, or life insurance contracts issued by an insurance company;

(D) the shareholder of record of any such stock described in subparagraph (C)(i) is the custodian or its nominee; and

“(E) the contracts described in subparagraph (C)(ii) are held by the custodian until distributed under the plan. For purposes of this title, in the case of a custodial account treated as a qualified trust under this section by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof.

“(2) DEFINITION.–For purposes of paragraph (1), the term ‘regulated investment company' means a domestic corporation which

“(A) is a regulated investment company within the meaning of section 851(a), and

“(B) issues only redeemable stock.
"(g) ANNUITY DEFINED.—For purposes of this section and sec-
tions 402, 403, and 404, the term 'annuity' includes a face-amount
certificate, as defined in section 2(a)(15) of the Investment Com-
pany Act of 1940 (15 U.S.C., sec. 80a-2); but does not include any
contract or certificate issued after December 31, 1962, which is
transferable, if any person other than the trustee of a trust described
in section 401(a) which is exempt from tax under section 501(a) is

the owner of such contract or certificate."
Applicability:
Taxable years beginning after December 31, 1962.

(Id., § 8, 76 Stat. 831.)
(d) (4) (B) --- July 30, 1965, H.R. 6675, P.L. 89-97, § 106(d)(4), 79 Stat. 337:
(in part)

Amended Sec. 401(d) (4) (B) (as added by P.L. 87792, § 2(3)) by striking out

"section 213(g)(3)"
and inserting in lieu thereof-

"section 72(m)(7)”.
Applicability:
Taxable years beginning after December 31, 1966.

(Id., $ 106(e), 79 Stat. 337.) (h) -------

Oct. 23, 1962, H.R. 10620, P.L. 87-863, § 2(a), 76 Stat. 1141: (redesignated, Amended Sec. 401 (qualified pension, profit-sharing, and stock added)

bonus plans) by redesignating subsection (b) (as relettered by P.L. 87–792, § 2(3)) as subsection (i) and by inserting after subsection (g) (annuity defined—as added by P.L. 87-792, Š 2(3)) the following new subsection:

“(b) MEDICAL, ETC., BENEFITS FOR RETIRED EMPLOYEES AND THEIR SPOUSES AND DEPENDENTS.—Under regulations prescribed

SEC. 401–Continued
(h) (added 1962)–Continued

by the Secretary or his delegate, a pension or annuity plan may
provide for the payment of benefits for sickness, accident, hospital-
ization, and medical expenses of retired employees, their spouses
and their dependents, but only if-

(1) such benefits are subordinate to the retirement benefits provided by the plan,

"(2) a separate account is established and maintained for such benefits,

“(3) the employer's contributions to such separate account are reasonable and ascertainable,

“(4) it is impossible, at any time prior to the satisfaction of all liabilities under the plan to provide such benefits, for any part of the corpus or income of such separate account to be within the taxable year or thereafter) used for, or diverted to, any purpose other than the providing of such benefits, and

“(5) notwithstanding the provisions of subsection (a)(2), upon the satisfaction of all liabilities under the plan to provide such benefits, any amount remaining in such separate account must,

under the terms of the plan, be returned to the employer.' Applicability:

Taxable years beginning after the date of enactment (October 23, 1962).

(Id., $ 2(c), 76 Stat. 1142.) (i)----- Feb. 26, 1964, H.R. 8363, P.L. 88-272, $ 219(a), 78 Stat. 57-58: (redesignated, Amended Sec. 401 by redesignating subsection (i) (as redesignated added) by P.L. 87-863, $ 2(a)) as subsection (i), and by inserting after sub

section (b) (as added by P.L. 87-863, § 2(a)) the following new subsection (i):

"(i) CERTAIN UNION-NEGOTIATED MULTIEMPLOYER PENSION PLANS.- In the case of a trust forming part of a pension plan which has been determined by the Secretary or his delegate to constitute a qualified trust under subsection (a) and to be exempt from taxation under section 501(a) for a period beginning after contributions were first made to or for such trust, if it is shown to the satisfaction of the Secretary or his delegate that

“(1) such trust was created pursuant to a collective bargaining agreement between employee representatives and two or more employers who are not related (determined under regulations prescribed by the Secretary or his delegate),

"(2) any disbursements of contributions, made to or for such trust before the time as of which the Secretary or his delegate determined that the trust constituted a qualified trust, substantially complied with the terms of the trust, and the plan of which the trust is a part, as subsequently qualified, and

“(3) before the time as of which the Secretary or his delegate determined that the trust constitutes a qualified trust, the contributions to or for such trust were not used in a manner which

would jeopardize the interests of its beneficiaries, then such trust shall be considered as having constituted a qualified trust under subsection (a) and as having been exempt from taxation under section 501(a) for the period beginning on the date on which contributions were first made to or for such trust and ending on the date such trust first constituted (without regard to this subsection) a qualified trust under subsection (a).

da, an which bection ap section under $us,

SEC. 401-Continued
(i) (added 1964)—Continued

Applicability:

Taxable years beginning after December 31, 1953, and ending after August 16, 1954, but only with respect to contributions made after December 31, 1954.

(Id., $ 219(b), 76 Stat. 58.)

Feb. 26, 1964, H.R. 8363, P.L. 88–272, $ 219(a), 78 Stat. 57: (redesig

Amended Sec. 401 by redesignating subsection (i) (original subsecnated)

tion (c) redesignated)"l as subsection (j).
Effective Date:

February 26, 1964—the date of enactment.
ANCILLARY PROVISIONS:
Sept. 14, 1960, H.R. 10960, P.L. 86–779, § 11, 74 Stat. 1010:

"SEC. 11. The Pension Fund, Plumbers' Local Union Numbered 775, which was created May 1, 1957, as a result of an agreement between Plumbers' Local Union Numbered 775, of Suffolk County, New York, affiliated with the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, and the Suffolk County Plumbing and Heating Contractors Association, Inc., and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a), for the period beginning May 1, 1957, and ending May 11, 1959, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries." Sept. 14, 1960, H.R. 12536, P.L. 86–781, § 5, 74 Stat. 1019_1020:

"Sec. 5. (a) The Iron Workers' Mid-America Pension Fund, which was established by an indenture executed on January 30, 1957, as a result of an agreement between various locals affiliated with the International Association of Bridge, Structural, and Ornamental Iron Workers and three employer associations, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a), of such Code, for years ending on or after December 17, 1958, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a), for the period beginning on January 30, 1957, and ending on December 16, 1958, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries.

(b) The Pattern Makers' Pension Trust Fund of Chicago, which was established by an agreement and declaration executed on April 28, 1958, between the Pattern Makers' League of North America, Chicago Association, and the Pattern Manufacturers' Association of Chicago and Vicinity, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, for years ending on or after February 25, 1959, shall be held and considered to

In The original subsection (c) of section 401 read as follows (68A Stat. 135): "(c) CROSS REFERENCE.—

“For exemption from tax of a trust qualified under this section, see section 501(a)." Subsection (c) of section 401 has been successively redesignated as follows:

As subsection (h), by P.L. 87-792, $ 2(3), 76 Stat. 811;
As subsection (i), by P.L. 87-863,' $ 2(a), 76 Stat. 1141;
As subsection (i), by P.L. 88-272, š 219(a), 78 Stat. 57.

SEC. 4014 Continued ANCILLARY PROVISIONS (P.L. 86–781, 85)—Continued have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a), for the period beginning on April 28, 1958, and ending on February 24, 1959, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries.

"(c) The Pipe and Refrigeration Fitters Local 537 Pension Fund of Boston, Massachusetts, which was created on September 1, 1955, as a result of an agreement between Local 537 of the United Association of Pipe Fitters and Refrigeration Fitters and the Heating, Piping, and Air Conditioning Contractors, Boston Association (now known as Mechanical Contractors Association of Boston), and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, for years ending on or after November 10, 1959, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a), for the period beginning on March 1, 1956, and ending on November 9, 1959, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust bas not in this period been operated in a manner which would jeopardize the interests of its beneficiaries.

"(d) The Annuity Plan of the Electrical Switchboard and Panelboard Manufacturing Industry of New York City, which was created May 16, 1956, as a result of an agreement between Local Union Numbered 3, International Brotherhood of Electrical Workers, American Federation of Labor and Congress of Industrial Organizations, and the Electrical Manufacturers of New York, Incorporated, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a), for the period beginning May 16, 1956, and ending May 22, 1957, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries.

"(e) The District Council No. 19 Welfare Fund, now known as Painters District Council No. 19 Welfare and Pension Fund, which was first created as of May 1, 1947, as a result of an agreement between Painters District Council No. 19, Brotherhood of Painters, Decorators and Paperhangers of America, of the State of New Jersey and painting contractors signatory to the union agreement, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a) and under section 165(a) of the Internal Revenue Code of 1939, for the period beginning January 1, 1954, and ending August 6, 1956, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries.

"(f) The Local Union Numbered 377 Pension Fund, which was created October 13, 1952, as a result of an agreement between Local Union Numbered 377, Brotherhood of Painters, Decorators and Paperhangers of America, of the State of New Jersey and Painting and Decorating Contractors of America, Hudson County Employers Chapter, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such sect'on 501(a) and under section 165(a) of the Internal Revenue Code of 1939, for the period beginning October 13, SEC. 401 Continued ANCILLARY PROVISIONS (P.L. 86–781, 85)—Continued 1952, and ending April 1, 1958, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries.” June 27, 1961, H.R. 1877, P.L. 87-59, § 1, 75 Stat. 120:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Plumbers Union Local Numbered 12 Pension Fund, which was established by a collective bargaining agreement effective September 1, 1954, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of said Code, for years ending on or after June 3, 1959, shall be held and considered to have been a qualified trust under said section 401(a), and to have been exempt from taxation under said section 501(a), for the period beginning on September 1, 1954, and ending on June 3, 1959, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries." June 27, 1961, H.R. 1877, P.L. 87-59, 84, 75 Stat. 121:

"SEC. 4. The pension fund of the slate, tile, and roofing industry in New York City, which was created as a result of an agreement between the Composition Roofers, Damp and Waterproof Workers Association, Local Union Numbered 8, and several employer associations and other individual employers in the industry, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, shall be held and considered to have been a qualified trust under such section 401(a) and to be exempt from taxation under such section 501(a), for the period beginning July 1, 1957, and ending November 24, 1958, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interest of its beneficiaries. Oct. 16, 1962, H.R. 10650, P.L. 87-834, 825, 76 Stat. 1066-1067: "SEC. 25. PENSION PLAN OF LOCAL UNION NUMBERED 435, INTERNATIONAL HOD

CARRIERS' BUILDING AND COMMON LABORERS' UNION OF AMERICA. “The pension plan of Local Union Numbered 435 of the International Hod Carriers' Building and Common Laborers' Union of America, which was negotiated to take effect May 1, 1960, pursuant to an agreement between such union and the Building Trades Employers Association of Rochester, New York, Incorporated, and which has been held by the Internal Revenue Service to constitute a qualified trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501(a) of such Code, shall be held and considered to have been a qualified trust under such section 401(a), and to have been exempt from taxation under such section 501(a), for the period beginning May 1, 1960, and ending April 20, 1961, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries." Feb. 26, 1964, H.R. 8363, P.L. 88–272, § 220(c)(3), 78 Stat. 63:

Amended section 209(e) of the Social Security Act (relating to the definition of wages) to read as follows:

"(e) Any payment made to, or on behalf of, an employee or his beneficiary (1) from or to a trust exempt from tax under section 165(a) of the Internal Revenue Code of 1939 at the time of such payment or, in the case of a payment after 1954, under sections 401 and 501(a) of the Internal Revenue Code of 1954, unless such payment is made to an employee of the trust as remuneration for services rendered as such employee and not as a beneficiary of the trust, or (2) under or to an annuity plan which, at the time of such payment, meets the requirements of section

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