Revenue Ruling 2014-24 modifies the rules for 81-100 group trusts by:
- stating that certain retirement plans qualified under the Puerto Rico Code may invest in 81-100 group trusts even if the plan is not qualified under the Internal Revenue Code.
- explaining that assets held by insurance company separate accounts may invest in 81-100 group trusts in some situations.
- giving transition relief for certain dual-qualified plans (plans with U.S. trusts qualified under both the U.S. and Puerto Rico Codes) to allow sponsors of those plans an extra year to spin off the assets and liabilities of their Puerto Rico employees into Puerto Rico-only qualified plans that meet ERISA Section 1022(i)(1).
- providing other various guidance.
Group Trust Investment Requirements
Rev. Rul. 81-100, 1981-1 C.B. 326, states that qualified retirement plans and individual retirement accounts (IRAs) may pool their investment assets in a group trust if certain conditions are met. Later revenue rulings added Internal Revenue Code Section 403(b), 457(b) and 401(a)(24) plans to the list of plans that may invest in 81-100 group trusts and added some extra requirements (Rev. Ruls. 2011-1 and 2004-67).
Puerto Rico Plans and Transition Relief
With respect to Puerto Rico plans, Rev. Rul. 2014-24:
- states that a plan described in ERISA Section 1022(i)(1) is eligible to participate in an 81-100 group trust if the conditions of Rev. Rul. 2011-1, as modified by Rev. Rul. 2014-24, are met; and
- extends certain transition relief provided in Rev. Rul. 2008-40 to transfers to ERISA Section 1022(i)(1) plans from qualified retirement plans that participated in 81-100 group trusts on January 10, 2011, if the transfers occur before January 1, 2016. The transition relief under Rev. Rul. 2008-40 is not extended for any other plans.
Separate Account Investment Requirements
Rev. Rul. 2014-24 states that assets held in an insurance company’s separate account may be invested in an 81-100 group trust if:
- the assets of the separate account are only made up of assets from group trust retiree benefit plans;
- the insurance company timely enters into an agreement with the trustee of the group trust that meets the requirements of Rev. Rul. 2014-24; and
- the assets of the separate account are protected from the claims of insurance company’s creditors.
Written Agreement Timing Requirements
If plan assets are invested through an insurance company’s separate account in an 81-100 group trust as of December 8, 2014, the trustee of the group trust and the insurance company must enter into a written agreement meeting the conditions of Rev. Rul. 2014-24 before January 1, 2016. If not, the group trust trustee and the insurance company must enter into a written agreement no later than the time of the investment.
Other Provisions Clarified
Rev. Rul. 2014-24 also:
- explains that, for governmental plans, the governing document includes any law that sets forth the relevant plan terms as well as any regulations, ordinances, and other state or local rules or policies binding the plan; and
- changes condition 6 under Rev. Rul. 2011-1 to make clear that the group trust instrument must provide for separate accounting (not separate accounts) to show the interest of each adopting group trust retiree benefit plan in the group trust.
- Group Trust Rules Modified by Revenue Ruling 2011-1