Rev. Rul. 56-692

Section 1.401-3(e) of the Income Tax Regulations establishes the general basis for integration of pension, annuity, profit-sharing, and stock bonus plans which limit coverage to employees earning in excess of $4200 a year, or which base contributions or benefits only on compensation in excess of that amount, with the benefits provided by the Social Security Act as amended through 1956. This basis is analogous to that provided in paragraph 5 of Mimeograph 6641, C.B. 1951-1, 41, for plans meeting certain conditions, but with $4200 substituted for $3600. However, a more liberal definition of `average annual compensation' than that provided in the mimeograph may now be used in the plan, as indicated in section 1.401-3(e)(2)(i) of the regulations. Held, for plans of the type described in the first sentence of this ruling but not meeting the conditions specified in section 1.401-3(e)(2)(ii) through (vi) of the regulations, the provisions set forth in paragraphs 6, 7, 8, 9, 10, 12, 13, 14, 16, 17, and 19 of Mimeograph 6641, supra, will apply but with $4200 substituted for $3600, and with the more liberal definition of `average annual compensation,' referred to above, permitted. Rules for determining whether plans not covered by the description in the first sentence above, but which require integration with social security benefits, i.e., plans similar to those dealt with in paragraphs 11 and 15 of Mimeograph 6641, supra, will be set forth in a subsequent ruling.