Rev. Rul. 69-478

X corporation, under an employee benefit plan, is required to make nonrefundable contributions to a group employee benefit trust. The contributions to the trust are to provide for the payment to insurers for group health insurance as well as to provide for group-term life insurance. The plan covers not only eligible active employees but also eligible retired employees. Contributions are made by the employer on a level basis (actuarially determined) so that at the time of an employee's retirement there is enough money in the fund to enable the trustee to continue to make the premium payments on the contracted insurance.

Held, the fact that some or all of the employees benefited under the plan are retired does not require that the plan be considered a deferred compensation plan governed by the provisions of section 404 of the Internal Revenue Code of 1954. The plan remains an "employee" benefit plan specifically excluded from the application of section 404(a) of the Code. Section 1.404(a)-1(a)(2) of the Income Tax Regulations. The deductibility of the required payments made by X under the plan is governed by section 162 of the Code and section 1.162-10 of the regulations. Compare Revenue Ruling 69-382, page 28, this Bulletin, wherein premium payments to an insurance company for group term life and health and accident coverage for both active and retired employees are held to be deductible under section 162 of the Code.