78. Exclusive benefit

Statement of Requirement: Code § 401(a)(2); Rev. Rul. 91-4, 1991-1 C.B. 57

Sample Plan Language:

The corpus or income of the trust may not be diverted to or used for other than the exclusive benefit of the participants or their beneficiaries.

(Note to reviewer: All nontrusteed plans (plans designated as funded only with insurance contracts) must use LRM #79 in lieu of LRM #78. All other plans, including trusts or custodial accounts, must include the above language.)

(Note to reviewer: Rev. Rul. 91-4 provides that plan terms may authorize return of employer contributions made because of a mistake of fact. The sample plan language below may be used without violating the exclusive benefit rule consistent with this ruling.)

Any contribution made by the employer because of a mistake of fact must be returned to the employer within one year of the contribution.

135 | D e f i n e d C o n t r i b u t i o n P l a n L R M P a c k a g e 0 1 / 2 0 2 4

In the event the deduction of a contribution made by the employer is disallowed under Section 404 of the Code, such contribution (to the extent disallowed) must be returned to the employer within one year of the disallowance of the deduction.

In the event that the Commissioner of Internal Revenue determines that the plan is not initially qualified under the Internal Revenue Code, any contribution made incident to that initial qualification by the employer must be returned to the employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the employer's return for the taxable year in which the plan is adopted, or such later date as the Secretary of the Treasury may prescribe.