Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 73-78

1973-1 C.B. 190

Sec. 401

IRS Headnote

An employees' plan providing coverage for only the salaried employees of an employer does not fail to qualify under section 401 of the Code merely because the excluded hourly-paid employees are not notified of the plan's adoption and salient provisions.

Full Text

Rev. Rul. 73-78

Advice has been requested whether, under the circumstances described below, a plan failed to qualify under section 401 of the Internal Revenue Code of 1954 because it was not communicated to all the employer's employees.

The employer adopted a plan the form of which met the requirements of section 401(a) of the Code. The plan provides coverage for all salaried employees who have at least three years of service.

All of the salaried employees were given copies of the plan, but the hourly-paid employees were in no way informed of the plan's adoption or the salient provisions thereof.

Section 401 of the Code sets out the requirements that must be met in order for a plan to qualify.

Section 1.401-1(a)(2) of the Income Tax Regulations provides that a qualified plan is a definite written program and arrangement which is communicated to the employees.

Revenue Ruling 72-509, 1972-2 C.B. 221, states that a qualified plan does not come into existence until it is communicated to the employees.

The employees to whom a plan must be communciated are all those in the classification, or classifications, that are or could become participants under the plan. In this case, copies of the plan were given to all salaried employees. Hence, the plan met the communications requirement contained in the regulations and Revenue Ruling 72-509, even though the excluded hourly-paid employees were not notified of the plan's adoption and the salient provisions thereof.

Accordingly, it is held that the plan did not fail to qualify under section 401 of the Code.