Rev. Rul. 69-230

An employer created a trust under a plan intended to qualify as a pension plan under section 401(a) of the Internal Revenue Code of 1954. The employer is currently making contributions to the trust. However, he pays no current compensation to his employees. All compensation is deferred and paid after retirement in the form of benefits under the plan.

Held, this plan does not qualify as a pension plan under section 401(a) of the Code, and the trust forming part of the plan is not exempt from Federal income tax under section 501(a) of the Code. The provisions of the Code relating to pension trust and the underlying legislative history indicate that Congress did not contemplate the qualification of a pension plan under which the current compensation of the participants is not substantial in relation to their total compensation.