TN 10 (09-90)
RS 01402.140 Tax-Exempt Trust
Employer payments made after 1950 to or on behalf of an employee or his/her beneficiary are not wages if they are made “from or to a trust” under a plan pursuant to sec. 401 of the IRC and exempt from tax under sec. 501(a) of the IRC of 1954, at the time of payment.
1. Employer Contact
If necessary, ask the employer if the IRS ruled on the tax-exempt status of the trust. Include a copy of the ruling or a certification of its contents in the claims file.
2. IRS Position
If the IRS has ruled that:
If the IRS has not ruled on the tax exempt status of the employer payments then they are wages for Social Security purposes.