Rev. Rul. 54-231

Section 39.165-1 of Regulations 118 provides that the term "profit-sharing plan," as used in section 165(a) of the Internal Revenue Code, is a plan established and maintained by an employer to provide for the participation in his profits, by his employees or their beneficiaries, based on definite predetermined formulas, for determining the profits to be shared and for distributing the funds accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as illness, disability, retirement, death, or severance of employment. The term "fixed number of years" is considered to mean at least 2 years. Accordingly, a plan which permits any employee to withdraw any portion of his share of the employer's contribution 18 months after it has been made and within a period of less than 2 years without regard to the attainment of a stated age or the occurrence of some event such as illness, disability, retirement, death, or severance of employment is not a profit-sharing plan within the purview of section 165(a) of the Code. Where the period of time is more than 2 years the Service will examine all the circumstances of the plan to determine its purpose and effect.