Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 66-16

1966-1 C.B. 88

Full Text

Rev. Rul. 66-16

An employee, on account of termination of his services from one of two corporate employers whose qualified pension plans are funded by contributions to a single trust, received a distribution representing the balance to his credit from the plan of the one employer while continuing his employment with the other. Section 402(a)(2) of the Internal Revenue Code of 1954 provides, in part, that in the case of an employees' trust described in section 401(a) of the Code, which is exempt from tax under section 501(a) of the Code, if the total distributions payable with respect to any employee are paid to the distributee in one taxable year on account of the employee's death or other separation from the service, or death after separation, the amount of such distribution, to the extent exceeding the amounts contributed by the employee, shall be considered a gain from the sale or exchange of a capital asset held for more than 6 months. Held, the distribution received by the employee upon his termination of employment from one employer representing the balance to his credit under the pension plan of such employer while continuing his employment with the other employer may be accorded long-term capital gains treatment under section 402(a)(2) of the Code, provided no part of the distribution is attributable to contributions made by the employer with whom he remains employed.