26 U.S.C. § 505 : US Code - Section 505: Additional requirements for organizations described in paragraph (9), (17), or (20) of section 501(c)

Search 26 U.S.C. § 505 : US Code - Section 505: Additional requirements for organizations described in paragraph (9), (17), or (20) of section 501(c)

(a) Certain requirements must be met in the case of organizations
described in paragraph (9) or (20) of section 501(c)
(1) Voluntary employees' beneficiary associations, etc.
An organization described in paragraph (9) or (20) of
subsection (c) of section 501 which is part of a plan shall not
be exempt from tax under section 501(a) unless such plan meets
the requirements of subsection (b) of this section.
(2) Exception for collective bargaining agreements
Paragraph (1) shall not apply to any organization which is part
of a plan maintained pursuant to an agreement between employee
representatives and 1 or more employers if the Secretary finds
that such agreement is a collective bargaining agreement and that
such plan was the subject of good faith bargaining between such
employee representatives and such employer or employers.
(b) Nondiscrimination requirements
(1) In general
Except as otherwise provided in this subsection, a plan meets
the requirements of this subsection only if -
(A) each class of benefits under the plan is provided under a
classification of employees which is set forth in the plan and
which is found by the Secretary not to be discriminatory in
favor of employees who are highly compensated individuals, and
(B) in the case of each class of benefits, such benefits do
not discriminate in favor of employees who are highly
compensated individuals.
A life insurance, disability, severance pay, or supplemental
unemployment compensation benefit shall not be considered to fail
to meet the requirements of subparagraph (B) merely because the
benefits available bear a uniform relationship to the total
compensation, or the basic or regular rate of compensation, of
employees covered by the plan.
(2) Exclusion of certain employees
For purposes of paragraph (1), there may be excluded from
consideration -
(A) employees who have not completed 3 years of service,
(B) employees who have not attained age 21,
(C) seasonal employees or less than half-time employees,
(D) employees not included in the plan who are included in a
unit of employees covered by an agreement between employee
representatives and 1 or more employers which the Secretary
finds to be a collective bargaining agreement if the class of
benefits involved was the subject of good faith bargaining
between such employee representatives and such employer or
employers, and
(E) employees who are nonresident aliens and who receive no
earned income (within the meaning of section 911(d)(2)) from
the employer which constitutes income from sources within the
United States (within the meaning of section 861(a)(3)).
(3) Application of subsection where other nondiscrimination rules
provided
In the case of any benefit for which a provision of this
chapter other than this subsection provides nondiscrimination
rules, paragraph (1) shall not apply but the requirements of this
subsection shall be met only if the nondiscrimination rules so
provided are satisfied with respect to such benefit.
(4) Aggregation rules
At the election of the employer, 2 or more plans of such
employer may be treated as 1 plan for purposes of this
subsection.
(5) Highly compensated individual
For purposes of this subsection, the determination as to
whether an individual is a highly compensated individual shall be
made under rules similar to the rules for determining whether an
individual is a highly compensated employee (within the meaning
of section 414(q)).
(6) Compensation
For purposes of this subsection, the term "compensation" has
the meaning given such term by section 414(s).
(7) Compensation limit
A plan shall not be treated as meeting the requirements of this
subsection unless under the plan the annual compensation of each
employee taken into account for any year does not exceed
$200,000. The Secretary shall adjust the $200,000 amount at the
same time, and by the same amount, as any adjustment under
section 401(a)(17)(B). This paragraph shall not apply in
determining whether the requirements of section 79(d) are met.
(c) Requirement that organization notify Secretary that it is
applying for tax-exempt status
(1) In general
An organization shall not be treated as an organization
described in paragraph (9), (17), or (20) of section 501(c) -
(A) unless it has given notice to the Secretary, in such
manner as the Secretary may by regulations prescribe, that it
is applying for recognition of such status, or
(B) for any period before the giving of such notice, if such
notice is given after the time prescribed by the Secretary by
regulations for giving notice under this subsection.
(2) Special rule for existing organizations
In the case of any organization in existence on July 18, 1984,
the time for giving notice under paragraph (1) shall not expire
before the date 1 year after such date of the enactment.