BIR Ruling

April 23, 1970 Rizal Commercial Banking Corporation 219 Buendia Avenue Makati, Rizal Gentlemen : This refers to your letter dated April 15, 1970 stating as follows: "A group of affiliate companies, "A", "B" and "C" established a group retirement plan which qualified for exemption under Republic Act 4917 and a group trust was created over the retirement funds of the said companies. "A" is withdrawing from the existing group retirement plan to set up its own independent retirement plan. May we have your opinion on the following questions: 1) How will the withdrawal of "A" affect the existing group retirement plan and the group trust? Will said withdrawal cause the automatic termination of the common plan and/or group trust? Is there need to amend the existing plan insofar as the remaining companies are concerned? Is the consent of "B" and "C" necessary before "A" can withdraw? 2) What are the requirements, if any, before "A" could withdraw that portion of the common trust fund which it contributed? With regard to the proposed independent retirement plan of "A", are we right in assuming that the same will have to be qualified under R.A. 4917? In reply, I have the honor to inform you that the withdrawal of "A" will not cause the termination of the common and/or group trust. Consequently, it would be necessary to amend or modify the existing plan, which may remain the retirement plan of the other two companies. Neither would this Office require the consent of "B" and "C" for purposes of giving legal effect to said withdrawal under Republic Act No. 4917. As regards your query in Item (2), please be advised that "A" cannot withdraw the amount it had already contributed to the common trust fund, the reason being that the participants to the plan had acquired a vested right thereon. The amount corresponding to the contributions of "A" will have to be transferred and carried over to the new trustee that "A" may subsequently appoint when it establishes its own independent and modified plan. The new plan to be instituted by "A" should be submitted anew for the determination of its qualification under Republic Act No. 4917. casia Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue