Requirements of the Profit Sharing Retirement Plan Program

February 9, 1960 BIR RULING NO. 065-60 Muller & Phipps (Manila) Ltd. Bonifacio Drive Near 25th St. Port Area, Manila Attention : Mr . E . E . Enriquez Gentlemen : With reference to your letter dated January 25, 1960, requesting information as to what are the requirements you must fulfill in connection with the profit sharing retirement plan program you intend to establish in your corporation. I have the honor to inform you as follows: prcd In order that an employees' trust may be exempt from income tax under subsection (b) of Section 56 of the Tax Code, as amended by Republic Act No. 1983, the following requisites must concur, namely: A) The employees' trust must be part of a pension, stock bonus or profit-sharing plan of an employer for the benefit of some or all of his employees; B) Contributions are made to the trust by such employer, such employees or both; C) Such contributions are made for the purpose of distributing to such employees both the earnings and principal of the fund accumulated by the trust; D) The fund is accumulated by the trust in accordance with the plan of which the trust is part; and E) The trust instrument makes it impossible (in the taxable year and at any time thereafter to employees covered by the trust) for any part of the trust corpus or income to be used for, or diverted to, purposes other than for the exclusive benefit of such employees. Pursuant to said amendment, any amount actually distributed by the abovementioned trust to any employee or distributee shall be taxable to him in the year in which so distributed to the extent that it exceeds the amounts paid in or contributed by such employee or distributee. If such employee or distributee has not made any contribution to the trust, the full amount actually distributed to him is subject to tax. cdll Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue