Rev. Rul. 59-401

Advice has been requested whether the applicability of sections 402(a)(2), 101(b) and 2039(c)(1) of the Internal Revenue Code of 1954 is affected where certain distributions are made directly by an insurance company to the beneficiaries of a pension trust forming part of a pension plan.

The pension plan and trust qualify under section 401(a) of the 1954 Code and the trust is exempt under section 501(a) of the Code. The benefits under the plan are funded by a group annuity contract purchased by the trust from an insurance company. As a matter of administrative convenience, rather than have the retirement, death, and severance benefits paid to the trust, the trustee desires to have them paid directly to the beneficiaries by the insurer.

It is held that where the aforementioned benefits, made pursuant to the plan and trust agreement, are paid directly by the insurance company, the payments may be considered to be distributed from the trust for purposes of sections 402(a)(2), 101(b) and 2039(c)(1) of the Code.