Rev. Rul. 55-427

A corporation maintained a nontrusteed retirement plan for its employees under which the participants contributed a percentage of salary less social security tax withheld. The company contributed an equal amount. Benefits were funded by the purchase of individual annuity policies on behalf of the participants. The company discontinued funding the plan by the purchase of individual annuity policies and immediately established a trust for the funding of benefits under the plan which will meet the requirements of section 401(a) of the Internal Revenue Code of 1954 (section 165(a) of the 1939 Code). Participants in the nontrusteed plan are eligible and required to participate in the trusteed plan. The insurer issuing the contracts under the nontrusteed plan required, as a condition of transferring any accumulation, the cancellation of all policies issued to participants and the transfer of all accumulations thereunder. The funds accumulated under the nontrusteed plan were transferred from the insurer to the trust forming a part of the trusteed plan. Held, The participants under the nontrusteed plan were not in receipt of income as a result of the transfer of the funds from the insurer to the trust