Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 59-94

1959-1 C.B. 25

Sec. 72

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Rev. Rul. 59-94

Under an employees' profit-sharing trust qualified under section 401(a) of the Internal Revenue Code of 1954 and exempt under section 501(a), an employee, upon termination of services, has the unrestricted right to an immediate lump sum payment of his interest in such trust. The trust agreement also provides that, in lieu of such lump sum payment, the employee may elect, within 60 days after the lump sum first becomes payable, to have the trustee purchase an annuity contract with the amount representing the employee's interest in the trust and distribute such contract to him. Held , where the employee exercises the election, within 60 days after termination of his services, to have the trustee purchase for and transfer to him an annuity in lieu of a lump sum distribution of the balance credited to his account, section 72(h) of the Code is applicable, and no part of such lump sum shall be includible in gross income at the time such sum first became payable.