Rev. Rul. 68-179

An employee and his employer (public school) entered into a salary reduction agreement of the type described in section 1.403(b)-1(b)(3) of the Income Tax Regulations. The terms of the agreement required the employer to purchase an annuity contract from a specified insurance company. Later, during the same taxable year, the employee and the employer agreed to purchase the annuity from an insurance company other than the one initially specified in the agreement.

Section 403(b) of the Internal Revenue Code of 1954 provides in effect for a limited exclusion from gross income for amounts contributed by an employer described therein to purchase an annuity contract for an employee. Section 1.403(b)-1(b)(3) of the regulations provides that, where such an annuity is being purchased pursuant to a salary reduction agreement, the employee must not be permitted to make more than one salary reduction agreement with the same employer during any taxable year of the employee beginning after December 31, 1963.

Held, changing insurers during the taxable year in which the salary reduction agreement was made did not result in a new agreement for that year, within the purview of section 1.403(b)-1(b)(3) of the regulations, even though the name of the first insurer was initially specified in the agreement.