IRS Further Expands Availability of Rev. Rul. 81-100 Group Trusts, and Extends Time to Spin Off Puerto Rican Participants from U.S. Plans


In Rev. Rul. 2011-1, released in advance form on December 16, 2010, the Internal Revenue Service (the Service) expanded the types of employee benefit plans that may participate in Rev. Rul. 81-100 group trusts, effective January 11, 2011, and extended until December 31, 2011, the time to spin off the assets related to Puerto Rican participants in a U.S. qualified retirement plan to a separate Puerto Rico plan.

Rev. Rul. 81-100 Group Trusts

By way of background, the Internal Revenue Code treats as tax-exempt the trusts funding a number of retirement or employee benefit plans subject to, among other things, an exclusive benefit requirement – generally, that the trust assets be used only for the exclusive benefit of plan participants and their beneficiaries. In Rev. Rul. 81-100, the Service continued a ruling position dating to 1956 that, subject to specified conditions, certain types of retirement plans may pool their trust assets for investment in a group trust, without violating the exclusive benefit rule, and the group trust would enjoy the same tax exemption as the trusts for the participating plans. In Rev. Rul. 2004-67, the Service permitted additional types of retirement arrangements to participate in these group trusts.

In Rev. Rul. 2011-1, the Service again expanded the types of plans that may invest in Rev. Rul. 81-100 trusts, and also clarified or added certain requirements for these trusts, as follows. It appears that all Rev. Rul. 81-100 trusts are subject to the restated requirements, and not just group trusts that take advantage of the expanded availability provided by Rev. Rul. 2011-1.

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