Rev. Rul. 68-299

Paragraph 11(b) of Revenue Ruling 61-75, C.B. 1961-1, 140, states that a profit-sharing or stock bonus plan involving integration with benefits provided by the Social Security Act may provide benefits only upon retirement or separation from service. That paragraph of Revenue Ruling 61-75 was amplified by Revenue Ruling 6-7-426, C.B. 1967-2, 149, to hold that such a plan, therefore, may not provide accident or health insurance benefits that are payable without separation from service. However, it may provide death benefits, or benefits upon retirement for disability, subject to the general requirements of section 401(a) of the Internal Revenue Code of 1954.

Such death benefits may be provided by the purchase of life insurance or otherwise. Where life insurance is purchased, the benefit is considered to be the payment upon death. The cost of the life insurance protection, although currently taxable as a distribution, is not considered a benefit precluded by paragraph 11(b) of Revenue Ruling 61-75.

Revenue Ruling 61-75 is hereby amplified. Revenue Ruling 67-426 is superseded since the provisions thereof are hereby incorporated in this Revenue Ruling.