26 USC 505 - Additional requirements for organizations described in paragraph (9) or (17) of section 501(c)

U.S Code last checked for updates: Nov 23, 2024

§ 505.

Additional requirements for organizations described in paragraph (9) or (17) of section 501(c)

(a)

Certain requirements must be met in the case of organizations described in section 501(c)(9)

(1)

Voluntary employees’ beneficiary associations, etc.

(2)

Exception for collective bargaining agreements

(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

(4)

Aggregation rules

(5)

Highly compensated individual

(6)

Compensation

(7)

Compensation limit

(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) or (17) 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

(Added Pub. L. 98–369, div. A, title V, § 513(a), July 18, 1984, 98 Stat. 863; amended Pub. L. 99–514, title XI, §§ 1114(b)(16), 1151(e)(2)(B), (g)(6), (j)(3), title XVIII, §§ 1851(c), 1899A(16), Oct. 22, 1986, 100 Stat. 2452, 2506–2508, 2863, 2959; Pub. L. 100–647, title I, § 1011B(a)(27)(C), (31)(B), (32), Nov. 10, 1988, 102 Stat. 3487, 3488; Pub. L. 101–140, title II, §§ 203(a)(1), (2), 204(c), Nov. 8, 1989, 103 Stat. 830, 833; Pub. L. 103–66, title XIII, § 13212(c), Aug. 10, 1993, 107 Stat. 472; Pub. L. 107–16, title VI, § 611(c)(1), June 7, 2001, 115 Stat. 97; Pub. L. 115–141, div. U, title IV, § 401(b)(21)(D), Mar. 23, 2018, 132 Stat. 1203.)

cite as: 26 USC 505