BIR Ruling

November 29, 1972 Mr. Domingo De Los Reyes 13 E. Jacinto, Malabon Rizal S i r : This refers to your letter dated August 12, 1972 requesting information as to whether Republic Act No. 4917 is still being implemented up to the present. In reply thereto, I have the honor to inform you that Republic Act No. 4917 is still enforced. Pursuant to Republic Act No. 4917, as amplified by Revenue Regulations No. 1-68 dated March 25, 1968, the retirement benefits received by officials and employees who have been in the service of the same private firm for at least ten (10) years and who are not less than fifty (50) years of age at the time of retirement are exempt from all taxes provided that the retirement benefits are in accordance with a reasonable private benefit plan maintained by the employer. The Act further states that the term "reasonable private benefit plan" means a pension, gratuity, stock bonus or profit sharing plan maintained by an employer for the benefit of some or all of his officials and employees, wherein contributions are made by such employer or officials and employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to any purpose other than for the exclusive benefit of the said officials and employees. It will be noted that for a plan to qualify as a "reasonable private benefit plan" under the Act, it is required that said plan be funded. Moreover, in order that retiring employees who meet the qualifications called for by the Act may avail of the tax exemption benefit under Republic Act No. 4917, the employer-company must submit to this Office, B.I.R. Form No. 17.60 duly filled out and accompanied by a written program constituting the plan and the trust instrument. Very truly yours, CONRADO P. DIAZ Deputy Commissioner of Internal Revenue (Operations)