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

  1. a. 

    If the IRS has ruled that:

    • The trust is tax-exempt: the payments are not wages.

    • The trust is not tax-exempt: the payments are wages.

  2. b. 

    If the IRS has not ruled on the tax exempt status of the employer payments then they are wages for Social Security purposes.

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RS 01402.140 - Tax-Exempt Trust - 01/30/1999
Batch run: 07/03/2014