Internal Revenue Bulletin 2004-26 (PDF rendition): IRS Revenue Procedures

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 200
4-26
June 28, 2004
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2004–55, page 1081.
Disability insurance benefits.This ruling addresses the in-
come tax treatment of short-term and long-term disability ben-
efits under sections 104(a)(3) and 105(a) of the Code.
Rev. Proc.
2004–37, page 1099.
This proce
dure provides a method for determining the source
of a pensio
n payment to a nonresident alien from a defined
benefit pl
an where the trust forming part of the plan is a trust
created or
organized in the United States that constitutes a
qualifie
d trust under section 401(a) of the Code. Rev. Proc.
2004–7 am
plified.
EMPLOYEE PLANS
T.D. 9130, page 1082.
Final regulations concern required minimum distributions under
section 401(a)(9) of the Code for defined benefit plans and an-
nuity contracts providing benefits under qualified plans, individ-
ual retirement plans, and section 403(b) contracts. This docu-
ment also contains a change to the separate account rules in
the final regulations concerning required minimum distributions
for defined contribution plans.
EXEMPT ORGANIZATIONS
Announcement 2004–53, page 1105.
A list is provided of organizations now classified as private foun-
dations.
Finding Lists begin on page ii.
Index for January through June begins on page vi.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
June 28, 20042004-26 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 104.—Compensa-
tion for Injuries or Sickness
(Also section 105.)
Disability insurance benefits.This
ruling addresses the income tax treatment
of short-term and long-term disability ben-
efits under sections 104(a)(3) and 105(a)
of the Code.
Rev. Rul. 2004–55
ISSUE
Under the Amended Plan described
below, are long-term disability benefits
received by an employee who becomes
disabled excludable from the employee’s
gross income under § 104(a)(3) of the
Internal Revenue Code?
FACTS
The Employer provides long-term dis-
ability benefits to its eligible employees
pursuant to a written plan. Long-term
disability benefits are provided through a
group insurance policy with a third-party
insurance carrier. Under the terms of the
plan, the Employer pays the entire pre-
mium for the coverage and does not in-
clude the cost of the coverage in the em-
ployee’s gross income (i.e.,thepremiums
are paid on a pre-tax basis and are not re-
ported on the employee’s Form W-2 for
that year).
The Employer amends the plan (the
Amended Plan) to provide that the Em-
ployer will continue to pay the long-term
disability coverage on a pre-tax basis for
eligible employees. However, each eligi-
ble employee may also irrevocably elect to
have the Employer pay for the long-term
disability coverage on an after-tax basis
(i.e., elect to be taxed currently on the
premiums paid by the Employer). An em-
ployee’s election applies to the entire cost
of the coverage that the Employer pays to
the third-party insurance carrier, so that
an employee may not elect after-tax treat-
ment for only a portion of the premiums.
If an employee elects after-tax treatment,
the Employer allocates the appropriate
proportion of the group premium to that
employee and includes that amount in the
employee’s gross income for the year in
which the payments are made (i.e.,the
premiums are reported on the employee’s
Form W-2 for that year).
Under the Amended Plan, the em-
ployee’s election to pay for the cost of
long-term disabilitycoverageonanaf-
ter-tax basis is irrevocable once the plan
year begins and must be made prior to the
beginning of the plan year in which the
election becomes effective. The employee
has the ability to make a new irrevocable
election for each plan year prior to the be-
ginning of that plan year. In lieu of a new
election for each plan year, the Employer
may provide that an employee’s prior elec-
tion, once made, continues from one year
to the next unless affirmatively changed
before the beginning of the new plan year.
The Employer may also provide that the
long-term disability premiums will auto-
matically be included in the employee’s
gross income for the year unless the em-
ployee affirmatively elects otherwise prior
to the beginning of the new plan year. Un-
der the Amended Plan, an employee who
becomes eligible for long-term disability
coverage during a plan year (e.g.,anewly
hired employee) may make an irrevocable
prospective election for the remainder of
that plan year.
LAW AND ANALYSIS
Section 61(a)(1) and § 1.61–21(a)(3) of
the Income Tax Regulations provide that,
except as otherwise provided in Subtitle
A, gross income includes compensation
for services, including fees, commissions,
fringe benefits, and similar items.
Section 104(a)(3) states that except in
the case of amounts attributable to (and
not in excess of) deductions allowed under
§ 213 for any prior taxable year, gross
income does not include amounts received
through accident or health insurance (or
through an arrangement having the ef-
fect of accident or health insurance) for
personal injuries or sickness (other than
amounts received by an employee to the
extent such amounts are attributable to
contributions by the employer which were
not includible in the gross income of the
employee, or are paid by the employer).
Section 1.104–1(d) states that if an in-
dividual purchases a policy of accident
or health insurance out of his own funds,
amounts received thereunder for personal
injuries or sickness are excludable from
his gross income under § 104(a)(3). Con-
versely, if an employer is either the sole
contributor to such a fund, or is the sole
purchaser of a policy of accident or health
insurance for his employees (on either a
group or individual basis), the exclusion
provided under § 104(a)(3) does not apply
to any amounts received by his employees
through such fund or insurance. Section
1.104–1(d) refers to § 1.105–1 for rules re-
lating to the determination of the amount
attributable to employer contributions.
Section 1.105–1(b) provides that all
amounts received by employees through
an accident or health plan which is fi-
nanced solely by their employer are sub-
ject to the provisions of § 105(a).
Under § 105(a), amounts received by an
employee through accident or health insur-
ance for personal injuries or sickness must
be included in gross income to the extent
such amounts (1) are attributable to con-
tributions by the employer which were not
includible in the gross income of the em-
ployee, or (2) are paid by the employer.
Section 1.105–1(c)(1) provides that in
the case of amounts received by an em-
ployee through an accident or health plan
which is financed partially by his employer
and partially by contributions of the em-
ployee, § 105(a) applies to the extent that
such payments are attributable to contri-
butions of the employer that were not in-
cludible in the employee’s gross income.
The portion of the amounts which is at-
tributable to the contributions of the em-
ployer shall be determined in accordance
with § 1.105–1(d) in the case of insured
plans.
Section 1.105–1(c)(2) provides that a
separate determination of the portion of
the amounts received under the accident or
health plan which is attributable to the con-
tributions of the employer shall be made
with respect to each class of employees in
any case where the plan provides that some
classes of covered employees contribute
2004-26 I.R.B.1081June 28, 2004

but others do not, or that the employer
will make different contributions for dif-
ferent classes of employees, or that differ-
ent classes of employees will make differ-
ent contributions, and where in any such
case both the contributions of the employer
on account of each such class of employ-
ees and the contributions of such class of
employees can be ascertained.
Section 1.105–1(d)(2) provides that if
the accident or health coverage is provided
under or is part of a group insurance pol-
icy purchased by contributions of the em-
ployer and of the employees, and the net
premiums for such coverage for a period
of at least three policy years are known
at the beginning of the calendar year, the
portion of any amount received by an em-
ployee which is attributable to the contri-
butions of the employer for such coverage
shall be an amount which bears the same
ratio to the amount received as the portion
of the net premiums contributed by the em-
ployer for the last three policy years which
are known at the beginning of the calendar
year bears to the total of the net premiums
contributed by the employer and all em-
ployees for such policy years. This provi-
sion is known as the “three-year look back
rule.”
The term “class of employees” as used
in § 1.105–1(c)(2) is dependent solely on
the contribution method used by the plan.
The regulations do not refer to length of
service, duties, or other factors as deter-
minative of a “class of employees.” Ac-
cordingly, under the Amended Plan, the
group of employees that elects after-tax
treatment of the long-term disability cov-
erage is a separate class of employees un-
der § 1.105–1(c)(2).
In addition, when aplan that provides
long-term disability benefits is amended
as described above, the Amended Plan is a
new plan in computing the contributions of
the Employer and the employees. With re-
spect to each employee, the Amended Plan
is financed either solely by the Employer
or solely by the employee. At no time
is the coverage under the Amended Plan
financed by both Employer and employee
contributions. Therefore, the Amended
Plan is not a contributory plan within the
meaning of § 1.105–1(c)(1) and, because
the Amended Plan is not described in
§ 1.105–1(c)(1), the “three-year look back
rule” set forth in § 1.105–1(d)(2) does not
apply.
Finally, the applicable statutes and reg-
ulations do not distinguish between short-
term and long-term disability plans. Thus,
if an employer offers both short-term and
long-term disability plans and permits em-
ployees to separately elect the contribu-
tion payment method for each plan, the law
does not require aggregation of the con-
tributions paid foreach plan in determin-
ing the taxation of benefits. Benefits paid
under a short-term or long-term disability
plan will be taxed according to the con-
tribution payment election made for each
type of coverage.
HOLDING
Under the Amended Plan, long-term
disability benefits received by an em-
ployee who has irrevocably elected, prior
to the beginning of the plan year, to have
the coverage paid by the Employer on
an after-tax basis for the plan year in
which the employee becomes disabled
are attributable solely to after-tax em-
ployee contributions and are excludable
from the employee’s gross income under
§ 104(a)(3).
Under the Amended Plan, long-term
disability benefits received by an em-
ployee whose coverage is paid by the
Employer on a pre-tax basis for the plan
year in which the employee becomes dis-
abled are attributable solely to pre-tax
Employer contributions and are includi-
ble in the employee’s gross income under
§ 105(a).
These holdings are equally applicable
to short-term disability benefits.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Barbara E. Pie of the Office of
Division Counsel/Associate Chief Coun-
sel(TaxExemptandGovernmentEnti-
ties). For further information regarding
this revenue ruling, contact Ms. Pie at
(202) 622–6080 (not a toll-free call).
Section 105.—Amounts
Received Under Accident
and Health Plans
This ruling addresses the income tax treatment of
short-term and long-term disability benefits under
sections 104(a)(3) and 105(a) of the Code. See Rev.
Rul. 2004-55, page 1081.
Section 401.—Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(a)(9)–6: Required minimum distribu-
tions for defined benefit plans and annuity contracts.
T.D. 9130
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 1
Required Distributions From
Retirement Plans
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Final regulations
SUMMARY: This document contains fi-
nal regulations concerning required mini-
mum distributions under section 401(a)(9)
for defined benefit plans and annuity con-
tracts providing benefits under qualified
plans, individual retirement plans, and sec-
tion 403(b) contracts. This document also
contains a change to the separate account
rules in the final regulations concerning re-
quired minimum distributions for defined
contribution plans. These final regulations
provide the public with guidance neces-
sary to comply with the law and will affect
administrators of, participants in, and ben-
eficiaries of qualified plans; institutions
that sponsor and administer individual re-
tirement plans, individuals who use indi-
vidual retirement plans for retirement in-
come, and beneficiaries of individual re-
tirement plans; and employees for whom
amounts are contributed to section 403(b)
annuity contracts, custodial accounts, or
retirement income accounts and beneficia-
ries of such contracts and accounts.
DATES:Effective Date:These regulations
areeffectiveJune15,2004.
Applicability Date:These regulations
apply for purposes of determining required
minimum distributions for calendar years
beginning on or after January 1, 2003.
INFORMATION CONTACT: Cathy Vohs
at (202) 622–6090.
June 28, 200410822004-26 I.R.B.

SUPPLEMENTARY INFORMATION:
Background
These final regulations amend 26 CFR
part 1 relating to section 401(a)(9). The
regulations provide guidance on the mini-
mum distribution requirements under sec-
tion 401(a)(9) for plans qualified under
section 401(a) and for other arrangements
that incorporate the section 401(a)(9) rules
by reference. The section 401(a)(9) rules
are incorporated by reference in section
408(a)(6) and (b)(3) for individual retire-
ment accounts and annuities (IRAs) (in-
cluding Roth IRAs, except as provided
in section 408A(c)(5)), section 403(b)(10)
for section 403(b) annuity contracts, and
section 457(d) for eligible deferred com-
pensation plans.
Section 401(a)(9) provides rules for
distributions during the life of the em-
ployee in section 401(a)(9)(A) and rules
for distributions after the death of the em-
ployee in section 401(a)(9)(B). Section
401(a)(9)(A)(ii) provides that the entire
interest of an employee in a qualified plan
must be distributed, beginning not later
than the employee’s required beginning
date, in accordance with regulations, over
the life of the employee or over the lives of
the employee and a designated beneficiary
(or over a period not extending beyond
the life expectancy of the employee and a
designated beneficiary).
Section 401(a)(9)(C) defines required
beginning date for employees (other than
5-percent owners and IRA owners) as
April 1 of the calendar year following the
later of the calendar year in which the
employee attains age 70
1
/2or the calendar
year in which the employee retires. For
5-percent owners and IRA owners, the
required beginning date is April 1 of the
calendar year following the calendar year
in which the employee attains age 70
1
/2,
even if the employee has not retired.
Section 401(a)(9)(D) provides that (ex-
cept in the case of a life annuity) the life
expectancy of an employee and the em-
ployee’s spouse that is used to determine
the period over which payments must be
made may be redetermined, but not more
frequently than annually.
Section 401(a)(9)(E) provides that the
termdesignated beneficiarymeans any in-
dividual designated as a beneficiary by the
employee.
Section 401(a)(9)(F) provides that, un-
der regulations prescribed by the Secre-
tary, any amount paid to a child shall be
treated as if it had been paid to the surviv-
ing spouse if such amount will be become
payable to the surviving spouse upon such
child reaching the age of majority (or other
designated event permitted under regula-
tions).
Section 401(a)(9)(G) provides that any
distribution required to satisfy the inciden-
tal death benefit requirement of section
401(a) is a required minimum distribution.
Section 401(a)(9) also provides that, if
the employee dies after distributions have
begun, the employee’s interest must be dis-
tributed at least as rapidly as under the
method used by the employee.
Section 401(a)(9) further provides that,
iftheemployeediesbeforerequiredmin-
imum distributions have begun, the em-
ployee’s interest must be either distributed
(in accordance with regulations) over the
life or life expectancy of the designated
beneficiary with thedistributions begin-
ning no later than 1 year after the date of
the employee’s death, ordistributed within
5 years after the death of the employee.
However, under section 401(a)(9)(B)(iv),
a surviving spouse may wait until the date
the employee would have attained age
70
1
/2to begin taking required minimum
distributions.
Comprehensive proposed regulations
under section 401(a)(9) were first pub-
lished in theFederal Registeron July 27,
1987 (EE–113–82, 1987–2 C.B. 881 [52
FR 28070]). Those proposed regulations
were amended in 1997 (REG–209463–82,
1988–1 C.B. 376 [62 FR 67780]) to ad-
dress the limited issue of the rules that
apply when a trust is designated as an
employee’s beneficiary. Comprehensive
proposed regulations were reproposed in
theFederal Registeron January 17, 2001
(REG–130477–00/REG–130481–00,
2001–1 C.B. 865 [66 FR 3928]). The
2001 proposed regulations substantially
revised and simplified the rules for defined
contribution plans but maintained the basic
structure for defined benefit plans and re-
quested additional comments on the rules
that should apply to those plans. With
respect to annuity payments, the 2001 pro-
posed regulations retained the basic struc-
ture of the 1987 proposed regulations and
the preamble indicated that the IRS and
Treasury were continuing to study these
rules and specifically requested updated
comments on current practices and issues
relating to required minimum distributions
from annuity contracts. Commentators on
the 2001 proposed regulations provided
information on the variety of annuity con-
tracts being developed and available as
insurance company products for purchase
with separate accounts.
Final and temporary regulations re-
lating to required minimum distributions
from qualified plans, individual retirement
plans, and section 403(b) annuity con-
tracts, custodial accounts, and retirement
income accounts were published in the
Federal Registeron April 17, 2002 (T.D.
8987, 2002–1 C.B. 852 [67 FR 18987]).
Proposed regulations that cross reference
those temporary regulations were pub-
lished in the Proposed Rules section of
theFederal Registeron April 17, 2002
(REG–108697–02, 2002–1 C.B. 918 [67
FR 18834]). The final and temporary
regulations were effective with the 2003
calendar year.
The 2002 regulations finalized the rules
for defined contribution plans and the ba-
sic rules regarding the determination of
the required beginningdate, determination
of designated beneficiary and other gen-
eral rules that apply to both defined ben-
efit and defined contribution plans. The
2002 regulations also provided temporary
regulations under §1.401(a)(9)–6T relat-
ing to minimum distribution requirements
for defined benefit plans and annuity con-
tracts purchased with an employee’s ac-
count balance under a defined contribu-
tion plan. In response to the comments
to the 2001 proposed regulations, the tem-
porary regulations significantly expanded
the situations in which annuity payments
under annuity contracts purchased with an
employee’s benefit may provide for in-
creasing payments, but this guidance was
provided in proposed and temporary form
rather than final form in order to give tax-
payers an opportunity to comment on these
changes.
A public hearing was held on the tem-
porary and proposed regulations on Octo-
ber 9, 2002. At the public hearing, and in
comments on the temporary regulations,
concerns were raised that requiring com-
pliance with certain of the rules in the
temporary regulations in 2003 would not
be appropriate. Many of the comments
relate to restrictions on variable annuity
2004-26 I.R.B.1083June 28, 2004

payments, and certain other increasing
annuity payments, set forth in A–1 of
§1.401(a)(9)–6T. Commentators also re-
quested additional guidance in applying
the rule in A–12 of §1.401(a)(9)–6T that
requires the entire interest under an annu-
ity contract to include the actuarial value
of other benefits (such as minimum sur-
vivor benefits) provided under the contract
and that the rule requiring the inclusion
of these values be delayed until the guid-
ance is provided. Finally, commentators
requested that special consideration be
provided to governmental plans.
In response to these comments and in
order to provide adequate time to con-
sider the issues raised, the IRS issued No-
tice 2003–2, 2003–1 C.B. 257, which pro-
vided that, pending the issuance of further
regulations, plans are permitted to satisfy
certain requirements in the 1987 or 2001
proposed regulations with respect to vari-
able annuity payments in lieu of comply-
ing with the corresponding requirements in
the 2002 temporary regulations, and that
the entire interest under an annuity con-
tract (including an annuity described in
section 408(b) or section 403(b)) is permit-
tedtobedeterminedasthedollaramount
credited to the employee or beneficiary
without regard to the actuarial value of
any other benefits (such as minimum sur-
vivor benefits) thatwill be provided under
the contract. Notice 2003–2 also provided
that, pending the issuance of further reg-
ulations under section 401(a)(9), govern-
mental plans are only required to satisfy a
reasonable and good faith interpretation of
section 401(a)(9). Finally, Notice 2003–2
provided that the transitional relief would
continue at least through the year in which
additional regulations are published, with a
later effective date for certain governmen-
tal plans.
In response to the comments received,
these final regulations make a number of
significant modifications to the proposed
and temporary regulations and adopt the
regulations as modified. They also make
a minor modification to the rules in A–2
of §1.401(a)(9)–8 for separate accounts.
These final regulations contain rules relat-
ing to minimum distribution requirements
for defined benefit plans and annuity con-
tracts purchased with an employee’s ac-
count balance under a defined contribution
plan. For purposes of this discussion of the
background of the regulations in this pre-
amble, as well as the explanation of provi-
sions below, whenever the termemployee
is used, it is intended to include not only
an employee but also an IRA owner.
Explanation of Provisions
Overview
These final regulations retain the basic
rules of the temporary regulations. For
example, distributions of an employee’s
entire interest must be paid in the form
of periodic annuity payments for the em-
ployee’s or beneficiary’s life (or the joint
lives of the employee and beneficiary) or
over a comparable period certain. The
payments must be nonincreasing or only
increase as provided in the regulations. As
provided in the temporary regulations, the
permitted increases under these final reg-
ulations include: adjustments to reflect in-
creases in the cost of living; any increase
in benefits pursuant to a plan amendment;
a pop up in payments in the event of the
death of the beneficiary or the divorce of
the employee and spouse; or return of em-
ployee contributions upon an employee’s
death. In addition, for both annuity con-
tracts purchased from insurance compa-
nies and annuities paid from section 401(a)
qualified trusts, the regulations allow vari-
able annuities and other regular increases,
if certain conditions are satisfied. The reg-
ulations also allow changes in distribution
form in certain circumstances.
These regulations retain many rules
from the temporary regulations without
modification. These include, for example,
rules regarding: the distribution of bene-
fits that accrue after an employee’s first
distribution calendar year; the treatment
of nonvested benefits; the actuarial in-
crease to an employee’s benefit that must
be provided if the employee retires after
the calendar year in which the employee
attains age 70
1
/2; and benefits that com-
mence in the form of an annuity prior to
an employee’s required beginning date.
Incidental benefit requirement
The basic purpose of the incidental ben-
efit rule is to ensure that the payments un-
der the annuity are primarily to provide re-
tirement benefits to the employee. These
final regulations retain the basic rule in the
temporary regulations that, if distributions
commence under a distribution option that
is in the form of a joint and survivor an-
nuity where the beneficiary is not the em-
ployee’s spouse, the incidental benefit re-
quirement will not be satisfied unless the
payments to the beneficiary as a percent-
age of the payments to the employee do
not exceed the percentage provided in the
table in the regulations. The percentage is
based on the number of years that the em-
ployee’s age exceeds the beneficiary’s age,
and the percentage decreases as the differ-
ence between the ages increases. This re-
flects the fact that the greater the number
of years younger a beneficiary is than the
employee, the greater the number of years
of expected payments that will be made to
the beneficiary after the death of the em-
ployee. Under the table in the temporary
regulations, a plan may not provide a 100
percent survivor benefit to an employee’s
nonspouse beneficiary under a joint and
survivor annuity if the beneficiary is more
than 10 years youngerthan the employee.
Some commentators suggested that an ad-
justment to the table is appropriate if the
employee commences distributions before
70
1
/2. This is because, in such a case, more
payments are expected to be made while
the employee is alive.
In response to these comments, the final
regulations provide that, if an employee’s
annuity starting date is at an age younger
than age 70, an adjustment is made to the
employee/beneficiary age difference. This
adjusted employee/beneficiary age differ-
ence is determined by decreasing the age
difference by the number of years the em-
ployee is younger than age 70 at the annu-
ity starting date. The effect of this change
is to permit a higher percentage after an
employee’s death for employees who com-
mence benefits at earlier ages. Thus, for
an employee age 55 at the time of the em-
ployee’s annuity starting date, a joint and
100 percent survivor annuity can be pro-
vided if the survivor is not more than 25
years younger than the employee.
Increasing annuities (including
acceleration and cost-of-living increases)
These final regulations clarify that a
plan may provide an annual increase that
does not exceed the increase in an eligi-
ble cost-of-living index for a 12-month pe-
riod ending in the year during which the
increase occurs or the prior year. An el-
igible cost-of-living index is a consumer
June 28, 200410842004-26 I.R.B.

price index (CPI) issued by the Bureau of
Labor Statistics and based on prices of all
items (or all items excluding food and en-
ergy), including an index for a population
of consumers (such as urban consumers or
urban wage earners and clerical workers)
or geographic area or areas (such as a given
metropolitan area or state).
Under these regulations, a plan may
provide for annual cost-of-living in-
creases, or may provide for less frequent
cost-of-living increases that are cumula-
tive since the most recent increase (or the
employee’s annuity starting date, if later),
as long as there is no actuarial increase to
reflect having not provided increases in
the interim years.
For a plan that provides annual in-
creases, but provides a ceiling on the
annual increase, and thus does not allow a
full cost-of-living increase in some years,
the plan may allow an unused portion of
the cost-of-living increase to be provided
in a subsequent year when the ceiling ex-
ceeds the increase in the CPI for that year
and still treat the increase in that subse-
quent year as an increase that does not
exceed an eligible cost-of-living index.
Finally, a plan can provide for annu-
ity payments with a percentage adjustment
based on the increase in compensation for
the position held by the employee at the
time of retirement. However, in the case of
a nongovernmental plan, this form of ad-
justment is only permitted if it is provided
under the terms of the plan as in effect on
April 17, 2002.
In addition to these permitted increases
in the amount of annuity payments, the
final regulations retain the rules in the
temporary regulations allowing an annuity
purchased from an insurance company
with an employee’s account balance un-
der a defined contribution plan to provide
for variable and increasing payments and
clarifythattheserulesapplytoanannu-
ity contract purchased from an insurance
company by a qualified trust for a defined
benefit plan. For an annuity contract pur-
chased from an insurance company, these
final regulations retain the rule that the to-
tal expected future payments (disregarding
any payment increases) as of the annuity
starting date must exceed the premium
being annuitized. This rule insures that
annuity payments start at a high enough
amount to prevent inappropriate deferral.
In response to comments asking for
more flexibility in the rules relating to
changes in distribution amounts from an
annuity contract purchased from an in-
surance company, the final regulations
replace the rule permitting partial and
complete withdrawals with a broader rule
permitting all types of acceleration. The
final regulations allow any method that
retains the same rate of increase in future
payments but results in the total future
expected payments under the annuity (dis-
regarding any future payment increases
and including the amount of any payment
made as a result of the acceleration) being
decreased, thereby allowing acceleration
in the form of a shorter period as well
as through withdrawals. In addition, the
requirement that a total withdrawal option
be available has been eliminated.
These final regulations also permit de-
fined benefit plans under a qualified trust
to provide variable or fixed-rate increas-
ing annuities paid directly from the trust,
but the control in the regulations on the
rate of increase for these annuities is dif-
ferent. For these annuities, increases in
payments solely to reflect better-than-as-
sumed investment performance are per-
mitted but only if the assumed interest rate
for calculating the initial level of payments
is at least 3 percent. Alternatively, fixed
rate increases may be provided but only
if the rate of increase is less than 5 per-
cent. Paralleling the payment of the undis-
tributed premium at death, the regulations
allow a payment at death to the extent that
the payments after annuitization are less
than the present value of the employee’s
accrued benefit as ofthe annuity starting
date calculated using the applicable inter-
est and morality under section 417(e).
The rule allowing an acceleration of
payments under an annuity has not been
extended to annuity payments from a qual-
ified trust. However, as noted below, such
plans are permitted to allow changes in
form of distribution in certain specific cir-
cumstances as described below. In addi-
tion, if distribution is in the form of a joint
and survivor annuity, the final regulations
allow the survivor to convert the survivor
annuity into a lump sum upon the death of
the employee.
Permitted changes in form of distribution
Some commentators requested that em-
ployees and beneficiaries be permitted to
change the form of future distributions in
response to changed circumstances, such
as upon retirement or death. In response
to these comments, the regulations allow
an employee or beneficiary to change the
form of future distributions in a number of
circumstances provided certain conditions
are satisfied. First, if distribution is in the
form of a period certain only annuity (i.e.,
an annuity with no life contingency), the
individual may change the form of distri-
bution prospectively at any time. The em-
ployee or beneficiary also is permitted to
change the form of distribution prospec-
tively upon an employee’s actual retire-
ment or upon plan termination, regardless
of the form of annuity payments before
retirement or plan termination. In addi-
tion, an employee may change to a qual-
ified joint and survivor annuity in connec-
tion with marriage.
In order to make these changes, the
future payments must satisfy section
401(a)(9) (as though payments first com-
menced on the new annuity starting date,
treating the actuarial value of the re-
maining payments as the employee’s or
beneficiary’s entire interest). As a condi-
tion to changes in the form of distribution,
whether under a period certain only annu-
ity or a life contingent annuity, the stream
of payments from the employee’s original
annuity starting date (both the payments
before and after the change in form) must
satisfy section 415 using the interest rate
assumption and applicable mortality table
in effect as of the annuity starting date.
In addition, the end point of the new pe-
riod certain, if any, may not be later the
end point available at the original annuity
starting date. Furthermore, the plan must
treat an individual electing a new form of
distribution under these rules as having
a new annuity starting date for purposes
of sections 415 and 417. Thus, the pay-
ments under the new form must satisfy
section 415 as of its new annuity start-
ing date based on the applicable interest
rate and applicable mortality table for that
date, taking into account prior payments.
Although not stated, for plans subject to
section 411, any form of distribution or
change in the form of distribution must
2004-26 I.R.B.1085June 28, 2004

not result in an impermissible forfeiture of
benefits.
A number of commentators requested
that the final regulations provide the rule
in prior proposed regulations that allowed
minimum distributions from a defined
benefit plan to be calculated using the
rule for defined contribution plans in
§1.401(a)(9)–5. The primary argument
for allowing this level of flexibility in cal-
culating distribution amounts from year
to year is to allow employees to adjust
to changed circumstances. The rules in
these final regulations allowing a change
in distribution form upon retirement or
plan termination, and at any time when
distribution is in the form of a term certain
only, address this need.
Value of guarantees in determining
account value prior to annuitization
The final regulations retain the basic
rule in the temporary regulations that, be-
fore annuitization, the defined contribution
plan rules apply. For this purpose, an em-
ployee’s entire interest under an annuity
contract is the dollar amount credited to
the employee or beneficiary under the con-
tract plus the actuarial value of any addi-
tional benefits (such as survivor benefits
in excess of the account balance) that will
be provided under the contract. A num-
ber of commentators requested guidance
on how this actuarial value is calculated
and indicated that, in certain circumstances
it would be appropriate to disregard this
additional value.
The IRS and Treasury believe that it is
generally appropriate to reflect the value of
additional benefits under an annuity con-
tract, just as the fair market value of all as-
sets generally must be reflected in valuing
an account balance under a defined contri-
bution plan. However, in response to these
comments, the final regulations allow the
additional benefits to be disregarded when
there is apro-ratareductionintheaddi-
tional benefits for any withdrawal, pro-
vided the actuarial present value of the ad-
ditional benefits is not more than 20 per-
cent of the account balance. An example
is provided that illustrates an acceptable
method of determining the value of an ad-
ditional benefit thatis a guaranteed death
benefit. In addition, an exception is pro-
vided for an additional benefit in the form
of a guaranteed return of premiums upon
death.
Certain payments to children
The final regulations provide rules
governing when, pursuant to section
401(a)(9)(F), payment of an employee’s
accrued benefit to a child may be treated
as if such payments were made to a surviv-
ing spouse. Under the final regulations,
payments under a defined benefit plan or
annuity contract that are made to an em-
ployee’s child until such child reaches the
age of majority (or dies, if earlier) may be
treated, for purposes of section 401(a)(9),
as if such payments were made to the
surviving spouse, provided they become
payable to the surviving spouse upon ces-
sation of the payments to the child. In
addition, for this purpose, a child may be
treated as having not reached the age of
majority if the child has not completed a
specified course of education and is under
the age of 26, or so long as the child is
disabled.
Governmental plans
A number of commentators raised con-
cerns that governmental plans offer annu-
ity distribution options that are not per-
mitted under the temporary regulations.
Most of the suggestions made by com-
mentators on behalf of governmental plans
were incorporated into the final regula-
tions, such as expanding the list of accept-
able COLAs; permitting lump sum distri-
butions to beneficiaries; and providing for
pop-up payments to a surviving spouse af-
ter the cessation of payments to a child.
Nevertheless,some substantive
changes recommended by or on behalf
of governmental plans were not made
in the final regulations. In light of the
difficulties a governmental plan faces in
changing its plan terms (e.g.,insome
states, the state constitution does not al-
low elimination of existing distribution
options) and the public oversight of such
plans, these final regulations provide a
grandfather rule under which, in the case
of an annuity distribution option provided
under the terms of a governmental plan as
in effect on April 17, 2002, the plan will
not fail to satisfy section 401(a)(9) merely
because the annuity payments do not sat-
isfy the requirements set forth in these
regulations. However, a grandfathered
distribution option must satisfy the statu-
tory requirements of section 401(a)(9),
based on a reasonable and good faith in-
terpretation of that section.
This grandfather rule only applies to ex-
isting plan provisions. Otherwise, the reg-
ulations provide that annuity payments un-
der governmental plans within the mean-
ing of section 414(d) must satisfy the rules
for nongovernmental plans. Thus, any new
distribution option in a governmental plan
or change in a distribution option must
comply with the rules applicable to non-
governmental plans under these final reg-
ulations.
Separate accounts under defined
contribution plans
Several comments have been received
raising administrative concerns with the
rule in the final regulations applicable to
defined contribution plans that recognizes
separate accounts for purposes of section
401(a)(9) only after the separate account
is actually established. In particular, con-
cerns have been raised that, for employees
who die late in a calendar year, it is nearly
impossible to set up separate accounts by
the end of the year so that they can be used
to determine required minimum distribu-
tions for the year after death. In response
to these comments the regulations have
been modified to provide that if separate
accounts, determined as of an employee’s
date of death, are actually established by
the end of the calendar year following the
year of an employee’s death, the separate
accounts can be used to determine required
minimum distributions for the year follow-
ing the year of the employee’s death. Un-
der the separate account rules, post-death
investment experience must be shared on
apro-ratabasis until the date on which the
separate accounts are actually established.
Effective Date
As provided in the temporary and pro-
posed regulations, these final regulations
apply for purposes of determining required
minimum distributions for calendar years
beginning on or after January 1, 2003.
However, in order to fulfill the commit-
ment in Notice 2003–2 to allow plans to
continue to use certain provisions from
the pre-existing proposed regulations and
June 28, 200410862004-26 I.R.B.

to provide plan sponsors sufficient time
to make any adjustments in their plans
needed to comply with these regulations, a
distribution from a defined benefit plan or
annuity contract forcalendar years 2003,
2004, and 2005 will not fail to satisfy
section 401(a)(9) merely because the pay-
mentsdonotsatisfytherulesinthesefi-
nal regulations, provided the payments sat-
isfy section 401(a)(9) based on a reason-
able and good faith interpretation of the
provisions of section 401(a)(9). For a plan
that satisfies the parallel provisions of the
1987 proposed regulations, the 2001 pro-
posed regulations, the 2002 temporary and
proposed regulations, or these final regula-
tions, a distribution will be deemed to sat-
isfy a reasonable good faith interpretation
of section 401(a)(9).
For governmental plans, this reasonable
good faith standard extends to the end of
the calendar year that contains the 90
th
day
after the opening of the first legislative ses-
sion of the legislative body with the author-
itytoamendtheplanthatbeginsonorafter
June 15, 2004, if such 90
th
day is later than
December 31, 2005.
Special Analyses
It has been determined that these fi-
nal regulations are not a significant regu-
latory action as defined in Executive Or-
der 12866. Therefore, a regulatory assess-
ment is not required. It also has been de-
termined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. Be-
cause §1.401(a)(9)–6 imposes no new col-
lection of information on small entities, a
Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) is not required. Pursuant to sec-
tion 7805(f) of the Code, the proposed reg-
ulations preceding these regulations were
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Drafting Information
The principal authors of these reg-
ulations are Marjorie Hoffman and
CathyA.VohsoftheOfficeoftheDi-
vision Counsel/Associate Chief Counsel
(Tax Exempt and Government Entities).
However, other personnel from the IRS
and Treasury participated in the develop-
ment of these regulations.
*****
Amendment
stotheRegulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by removing the entry
for “§1.401(a)(9)–6T” and adding an en-
try in numerical order to read, in part, as
follows:
Authority: 26 U.S.C. 7805 * * *
§1.401(a)(9)–6 is also issued under 26
U.S.C. 401(a)(9). * * *
Par. 2. Remove “§1.401(a)(9)–6T” and
replace it with §1.401(a)(9)–6 each time it
is used in the sections listed below:
§1.401(9)–0
§1.401(a)(9)–1 A–2(b)
§1.401(a)(9)–2 A–1(c)
§1.401(a)(9)–2 A–5
§1.401(a)(9)–2 A–6(a)
§1.401(a)(9)–3 A–1(a)
§1.401(a)(9)–3 A–1(b)
§1.401(a)(9)–3 A–6
§1.401(a)(9)–4 A–4(a)
§1.401(a)(9)–5 A–1(e)
§1.401(a)(9)–8 A–2(a)(3)
§1.401(a)(9)–8 A–6(b)(2)
§1.401(a)(9)–8 A–7
§1.401(a)(9)–8 A–8
§1.403(b)–3 A–1(c)(3)
§1.408–8 A–1(a)
§1.408–8 A–1(b)
§54.4974–2 A–3(a)
§54.4974–2 A–4(b)(2)(i)
Par. 3. Section 1.401(a)(9)–6 is added
to read as follows:
§1.401(a)(9)–6 Required minimum
distributions for defined benefit plans and
annuity contracts.
Q–1. How must distributions under a
defined benefit plan be paid in order to
satisfy section 401(a)(9)?
A–1. (a)General rules.Inordertosat-
isfy section 401(a)(9), except as otherwise
provided in this section, distributions of
the employee’s entire interest under a de-
fined benefit plan must be paid in the form
of periodic annuity payments for the em-
ployee’s life (or the joint lives of the em-
ployee and beneficiary) or over a period
certain that does not exceed the maximum
length of the period certain determined in
accordance with A–3 of this section. The
interval between payments for the annuity
must be uniform over the entire distribu-
tion period and must not exceed one year.
Once payments have commenced over a
period, the period may only be changed in
accordance with A–13 ofthis section. Life
(or joint and survivor) annuity payments
must satisfy the minimum distribution in-
cidental benefit requirements of A–2 of
this section. Except as otherwise provided
in this section (such as permitted increases
described in A–14 of this section), all pay-
ments (whether paid over an employee’s
life, joint lives, or a period certain) also
must be nonincreasing.
(b)Life annuity with period certain.
The annuity may be a life annuity (or joint
and survivor annuity) with a period certain
if the life (or lives, if applicable) and period
certain each meet the requirements of para-
graph (a) of this A–1. For purposes of this
section, if distributions are permitted to be
made over the lives of the employee and
the designated beneficiary, references to a
life annuity include a joint and survivor an-
nuity.
(c)Annuity commencement.(1)An-
nuity payments must commence on or
before the employee’s required begin-
ning date (within the meaning of A–2
of §1.401(a)(9)–2). The first payment,
whichmustbemadeonorbeforetheem-
ployee’s required beginning date, must
be the payment which is required for one
payment interval. The second payment
neednotbemadeuntiltheendofthe
next payment interval even if that pay-
ment interval ends in the next calendar
year. Similarly, in the case of distributions
commencing after death in accordance
with section 401(a)(9)(B)(iii) and (iv),
the first payment, which must be made
on or before the date determined under
A–3(a) or (b) (whichever is applicable)
of §1.401(a)(9)–3, must be the payment
which is required for one payment inter-
val. Payment intervals are the periods
for which payments are received,e.g.,
bimonthly, monthly, semi-annually, or an-
nually. All benefit accruals as of the last
day of the first distribution calendar year
must be included in the calculation of the
amount of annuity payments for payment
intervals ending on or after the employee’s
required beginning date.
2004-26 I.R.B.1087June 28, 2004

(2) This paragraph (c) is illustrated by
the following example:
Example. A defined benefit plan (Plan X) pro-
vides monthly annuity payments of $500 for the life
of unmarried participants with a 10-year period cer-
tain. An unmarried, retired participant (A) in Plan X
attains age 70
1
/2in 2005. In order to meet the require-
ments of this paragraph, the first monthly payment of
$500 must be made on behalf of A on or before April
1, 2006, and the payments must continue to be made
in monthly payments of $500 thereafter for the life
and 10-year period certain.
(d)Single sum distributions.Inthe
case of a single sum distribution of an em-
ployee’s entire accrued benefit during a
distribution calendar year, the amount that
is the required minimum distribution for
the distribution calendar year (and thus not
eligible for rollover under section 402(c))
is determined using either the rule in para-
graph (d)(1) or the rule in paragraph (d)(2)
of this A–1.
(1) The portion of the single sum dis-
tribution that is a required minimum dis-
tribution is determined by treating the sin-
gle sum distribution as a distribution from
an individual account plan and treating
the amount of the single sum distribution
as the employee’s account balance as of
the end of the relevant valuation calen-
dar year. If the single sum distribution
is being made in the calendar year con-
taining the required beginning date and
the required minimum distribution for the
employee’s first distribution calendar year
has not been distributed, the portion of the
single sum distribution that represents the
required minimum distribution for the em-
ployee’s first and second distribution cal-
endar years is not eligible for rollover.
(2) The portion of the single sum distri-
bution that is a required minimum distribu-
tion is permitted to be determined by ex-
pressing the employee’s benefit as an an-
nuity that would satisfy this section with
an annuity starting date as of the first day
of the distribution calendar year for which
the required minimum distribution is being
determined, and treating one year of an-
nuity payments as the required minimum
distribution for that year, and not eligi-
ble for rollover. If the single sum distri-
bution is being made in the calendar year
containing the required beginning date and
the required minimum distribution for the
employee’s first distribution calendar year
has not been made, the benefit must be ex-
pressed as an annuity with an annuity start-
ing date as of the first day of the first dis-
tribution calendar year and the payments
for the first two distribution calendar years
would be treated as required minimum dis-
tributions, and not eligible for rollover.
(e)Death benefits. The rule in para-
graph (a) of this A–1, prohibiting increas-
ing payments under an annuity applies to
payments made upon the death of an em-
ployee. However, for purposes of this sec-
tion, an ancillary death benefit described
in this paragraph (e) may be disregarded in
applying that rule. Such an ancillary death
benefit is excluded in determining an em-
ployee’s entire interest and the rules pro-
hibiting increasing payments do not apply
to such an ancillary death benefit. A death
benefit with respect to an employee’s ben-
efit is an ancillary death benefit for pur-
posesofthisA–1if—
(1) It is not paid as part of the em-
ployee’s accrued benefit or under any op-
tional form of the employee’s benefit; and
(2) The death benefit, together with any
other potential payments with respect to
the employee’s benefit that may be pro-
vided to a survivor, satisfy the incidental
benefit requirement of §1.401–1(b)(1)(i).
(f)Additional guidance. Additional
guidance regarding how distributions un-
der a defined benefit plan must be paid in
order to satisfy section 401(a)(9) may be
issued by the Commissioner in revenue
rulings, notices, or other guidance pub-
lished in the Internal Revenue Bulletin.
See §601.601(d)(2)(ii)(b) of this chapter.
Q–2. How must distributions in the
form of a life (or joint and survivor)
annuity be made in order to satisfy the
minimum distribution incidental ben-
efit (MDIB) requirement of section
401(a)(9)(G) and the distribution compo-
nent of the incidental benefit requirement
of §1.401–1(b)(1)(i)?
A–2. (a)Life annuity for employee.If
the employee’s benefit is paid in the form
of a life annuity for the life of the employee
satisfying section 401(a)(9) without regard
to the MDIB requirement, the MDIB re-
quirement of section 401(a)(9)(G) will be
satisfied.
(b)Joint and survivor annuity, spouse
beneficiary. If the employee’s sole ben-
eficiary, as of the annuity starting date
for annuity payments, is the employee’s
spouse and the distributions satisfy sec-
tion 401(a)(9) without regard to the MDIB
requirement, the distributions to the em-
ployee will be deemed to satisfy the MDIB
requirement of section 401(a)(9)(G). For
example, if an employee’s benefit is being
distributed in the form of a joint and sur-
vivor annuity for the lives of the employee
and the employee’s spouse and the spouse
is the sole beneficiary of the employee, the
amount of the periodic payment payable to
the spouse would not violate the MDIB re-
quirement if it was 100 percent of the an-
nuity payment payable to the employee, re-
gardless of the difference in the ages be-
tween the employee and the employee’s
spouse.
(c)Joint and survivor annuity, non-
spouse beneficiary—(1)Explanation of
rule. If distributions commence under a
distribution option that is in the form of
a joint and survivor annuity for the joint
lives of the employee and a beneficiary
other than the employee’s spouse, the
minimum distribution incidental benefit
requirement will not be satisfied as of
the date distributions commence unless
under the distribution option, the annu-
ity payments to be made on and after the
employee’s required beginning date will
satisfy the conditions of this paragraph (c).
The periodic annuity payment payable to
the survivor must not at any time on and
after the employee’s required beginning
date exceed the applicable percentage of
the annuity payment payable to the em-
ployee using the table in paragraph (c)(2)
of this A–2. The applicable percentage
is based on the adjusted employee/ben-
eficiary age difference. The adjusted
employee/beneficiary age difference is
determined by first calculating the excess
of the age of the employee over the age
of the beneficiary based on their ages on
their birthdays in a calendar year. Then,
if the employee is younger than age 70,
the age difference determined in the pre-
vious sentence is reduced by the number
of years that the employee is younger than
age 70 on the employee’s birthday in the
calendar year that contains the annuity
starting date. In thecase of an annuity that
provides for increasing payments, the re-
quirement of this paragraph (c) will not be
violated merely because benefit payments
to the beneficiary increase, provided the
increase is determined in the same manner
for the employee and the beneficiary.
(2)Table.
June 28, 200410882004-26 I.R.B.

Adjusted employee/beneficiary agedifferenceApplicable percentage
10 years or less100%
1196%
1293%
1390%
1487%
1584%
1682%
1779%
1877%
1975%
2073%
2172%
2270%
2368%
2467%
2566%
2664%
2763%
2862%
2961%
3060%
3159%
3259%
3358%
3457%
3556%
3656%
3755%
3855%
3954%
4054%
4153%
4253%
4353%
44 and greater52%
(3)Example. This paragraph (c) is il-
lustrated by the following example:
Example. Distributions commence on January 1,
2003, to an employee (Z), born March 1, 1937, af-
ter retirement at age 65. Z’s daughter (Y), born Feb-
ruary 5, 1967, is Z’s beneficiary. The distributions
are in the form of a joint and survivor annuity for
the lives of Z and Y with payments of $500 a month
to Z and upon Z’s death of $500 a month to Y,i.e.,
the projected monthly payment to Y is 100 percent of
the monthly amount payable to Z. Accordingly, under
A–10 of this section, compliance with the rules of this
section is determined as of the annuity starting date.
The adjusted employee/beneficiary age difference is
calculated by taking the excess of the employee’s age
over the beneficiary’s age and subtracting the num-
ber of years the employee is younger than age 70.
In this case, Z is 30 years older than Y and is com-
mencing benefit 5 years before attaining age 70 so the
adjusted employee/beneficiary age difference is 25
years. Under the table in paragraph (c)(2) of this A–2,
the applicable percentage for a 25-year adjusted em-
ployee/beneficiary age difference is 66 percent. As of
January 1, 2003 (the annuity starting date), the plan
does not satisfy the MDIB requirement because, as
of such date, the distribution option provides that, as
of Z’s required beginning date, the monthly payment
to Y upon Z’s death will exceed 66 percent of Z’s
monthly payment.
(d)Period certain and annuity features.
If a distribution form includes a period cer-
tain, the amount of the annuity payments
payable to the beneficiary need not be re-
duced during the period certain, but in the
case of a joint and survivor annuity with a
period certain, the amount of the annuity
payments payable to the beneficiary must
satisfy paragraph (c) of this A–2 after the
expiration of the period certain.
(e)Deemed satisfaction of incidental
benefit rule. Except in the case of dis-
tributions with respect to an employee’s
benefit that include an ancillary death ben-
efit described in paragraph A–1(e) of this
section, to the extent the incidental benefit
requirement of §1.401–1(b)(1)(i) requires
a distribution, thatrequirement is deemed
to be satisfied if distributions satisfy the
minimum distribution incidental benefit
requirement of this A–2. If the employee’s
benefits include an ancillary death bene-
fit described in paragraph A–1(e) of this
section, the benefits (including the ancil-
lary death benefit) must be distributed in
accordance with the incidental benefit re-
quirement describedin §1.401–1(b)(1)(i)
and the benefits (excluding the ancil-
lary death benefit) must also satisfy the
minimum distribution incidental benefit
requirement of this A–2.
Q–3. How long is a period certain under
a defined benefit plan permitted to extend?
2004-26 I.R.B.1089June 28, 2004

A–3. (a)Distributions commencing
during the employee’s life. The period
certain for any annuity distributions com-
mencing during the life of the employee
with an annuity starting date on or after
the employee’s required beginning date
generally is not permitted to exceed the
applicable distribution period for the em-
ployee (determined in accordance with
the Uniform Lifetime Table in A–2 of
§1.401(a)(9)–9) for the calendar year that
contains the annuitystarting date. See
A–10 of this section for the rule for an-
nuity payments with an annuity starting
date before the required beginning date.
However, if the employee’s sole benefi-
ciary is the employee’s spouse, the period
certain is permitted to be as long as the
joint life and last survivor expectancy of
the employee and the employee’s spouse,
if longer than the applicable distribution
period for the employee, provided the pe-
riod certain is not provided in conjunction
with a life annuity under A–1(b) of this
section.
(b)Distributions commencing after the
employee’s death. (1) If annuity distribu-
tions commence after the death of the em-
ployee under the life expectancy rule (un-
der section 401(a)(9)(B)(iii) or (iv)), the
period certain for any distributions com-
mencing after death cannot exceed the ap-
plicable distribution period determined un-
der A–5(b) of §1.401(a)(9)–5 for the distri-
bution calendar year that contains the an-
nuity starting date.
(2) If the annuity starting date is in a cal-
endar year before the first distribution cal-
endar year, the period certain may not ex-
ceed the life expectancy of the designated
beneficiary using the beneficiary’s age in
the year that contains the annuity starting
date.
Q–4. Will a plan fail to satisfy section
401(a)(9) merely because distributions are
made from an annuity contract which is
purchased from an insurance company?
A–4. A plan will not fail to satisfy
section 401(a)(9) merely because distribu-
tions are made from an annuity contract
which is purchased with the employee’s
benefit by the plan from an insurance com-
pany, as long as the payments satisfy the
requirements of this section. If the annu-
ity contract is purchased after the required
beginning date, the first payment interval
must begin on or before the purchase date
and the payment required for one payment
interval must be made no later than the end
of such payment interval. If the payments
actually made under the annuity contract
do not meet the requirements of section
401(a)(9), the plan fails to satisfy section
401(a)(9). See also A–14 of this section
permitting certain increases under annuity
contracts.
Q–5. In the case of annuity distribu-
tions under a defined benefit plan, how
must additional benefits that accrue after
the employee’s first distribution calendar
year be distributed in order to satisfy sec-
tion 401(a)(9)?
A–5. (a) In the case of annuity dis-
tributions under a defined benefit plan, if
any additional benefits accrue in a calendar
year after the employee’s first distribution
calendar year, distribution of the amount
that accrues in the calendar year must com-
mence in accordance with A–1 of this sec-
tion beginning with the first payment in-
terval ending in the calendar year immedi-
ately following the calendar year in which
such amount accrues.
(b) A plan will not fail to satisfy section
401(a)(9) merely because there is an ad-
ministrative delay in the commencement
of the distribution of the additional bene-
fits accrued in a calendar year, provided
that the actual payment of such amount
commences as soon as practicable. How-
ever, payment must commence no later
than the end of the first calendar year fol-
lowing the calendar year in which the addi-
tional benefit accrues, and the total amount
paid during such first calendar year must
be no less than the total amount that was
required to be paid during that year under
A–5(a) of this section.
Q–6. If a portion of an employee’s ben-
efit is not vested as of December 31 of a
distribution calendar year, how is the de-
termination of the required minimum dis-
tribution affected?
A–6. In the case of annuity distribu-
tions from a defined benefit plan, if any
portion of the employee’s benefit is not
vested as of December 31 of a distribu-
tion calendar year, the portion that is not
vested as of such date will be treated as not
having accrued for purposes of determin-
ing the required minimum distribution for
that distribution calendar year. When an
additional portion of the employee’s ben-
efit becomes vested, such portion will be
treated as an additional accrual. See A–5
of this section for the rules for distribut-
ing benefits which accrue under a defined
benefit plan after the employee’s first dis-
tribution calendar year.
Q–7. If an employee (other than a
5-percent owner) retires after the calen-
dar year in which the employee attains
age 70
1
/2, for what period must the em-
ployee’s accrued benefit under a defined
benefit plan be actuarially increased?
A–7. (a)Actuarial increase starting
date. If an employee (other than a 5-per-
cent owner) retires after the calendar year
in which the employee attains age 70
1
/2,
in order to satisfy section 401(a)(9)(C)(iii),
the employee’s accrued benefit under a de-
fined benefit plan must be actuarially in-
creased to take into account any period af-
ter age 70
1
/2in which the employee was not
receiving any benefits under the plan. The
actuarial increase required to satisfy sec-
tion 401(a)(9)(C)(iii) must be provided for
the period starting on the April 1 following
the calendar year in which the employee
attains age 70
1
/2, or January 1, 1997, if
later.
(b)Actuarial increase ending date.
The period for which the actuarial in-
crease must be provided ends on the date
on which benefits commence after retire-
ment in an amount sufficient to satisfy
section 401(a)(9).
(c)Nonapplication to plan providing
same required beginning date for all em-
ployees. If, as permitted under A–2(e) of
§1.401(a)(9)–2, a plan provides that the re-
quired beginning date for purposes of sec-
tion 401(a)(9) for all employees is April 1
of the calendar year following the calen-
dar year in which the employee attains age
70
1
/2(regardless of whether the employee
is a 5-percent owner) and the plan makes
distributions in an amount sufficient to sat-
isfy section 401(a)(9) using that required
beginning date, no actuarial increase is re-
quired under section 401(a)(9)(C)(iii).
(d)Nonapplication to governmental
and church plans. The actuarial increase
required under this A–7 does not apply to a
governmental plan (within the meaning of
section 414(d)) or a church plan. For pur-
poses of this paragraph, the termchurch
planmeans a plan maintained by a church
for church employees, and the termchurch
means any church (as defined in section
3121(w)(3)(A)) or qualified church-con-
trolled organization (as defined in section
3121(w)(3)(B)).
June 28, 200410902004-26 I.R.B.

Q–8. What amount of actuarial increase
is required under section 401(a)(9)(C)(iii)?
A–8. In order to satisfy section
401(a)(9)(C)(iii), the retirement bene-
fits payable with respect to an employee
as of the end of the period for actuarial
increases (described in A–7 of this sec-
tion) must be no less than: the actuarial
equivalent of the employee’s retirement
benefits that would have been payable
as of the date the actuarial increase must
commence under paragraph (a) of A–7 of
this section if benefits had commenced on
that date; plus the actuarial equivalent of
any additional benefits accrued after that
date; reduced by the actuarial equivalent
of any distributions made with respect to
the employee’s retirement benefits after
that date. Actuarial equivalence is deter-
mined using the plan’s assumptions for
determining actuarial equivalence for pur-
poses of satisfying section 411.
Q–9. How does the actuarial increase
required under section 401(a)(9)(C)(iii) re-
late to the actuarial increase required under
section 411?
A–9. In order for any of an employee’s
accrued benefit to be nonforfeitable as re-
quired under section 411, a defined benefit
plan must make an actuarial adjustment to
an accrued benefit, the payment of which
is deferred past normal retirement age.
The only exception to this rule is that gen-
erally no actuarial adjustment is required
to reflect the period during which a benefit
is suspended as permitted under section
203(a)(3)(B) of the Employee Retirement
Income Security Act of 1974 (ERISA) (88
Stat. 829). The actuarial increase required
under section 401(a)(9)(C)(iii) for the pe-
riod described in A–7 of this section is
generally the same as, and not in addition
to, the actuarial increase required for the
same period under section 411 to reflect
any delay in the payment of retirement
benefits after normal retirement age. How-
ever, unlike the actuarial increase required
under section 411, the actuarial increase
required under section 401(a)(9)(C)(iii)
must be provided even during any pe-
riod during which an employee’s benefit
has been suspended in accordance with
ERISA section 203(a)(3)(B).
Q–10. What rule applies if distribu-
tionscommencetoanemployeeonadate
before the employee’s required beginning
date over a period permitted under section
401(a)(9)(A)(ii) and the distribution form
is an annuity under which distributions are
made in accordance with the provisions of
A–1 of this section?
A–10. (a)General rule. If distribu-
tions commence to an employee on a date
before the employee’s required beginning
date over a period permitted under section
401(a)(9)(A)(ii) and the distribution form
is an annuity under which distributions are
made in accordance with the provisions
of A–1 of this section, the annuity start-
ing date will be treated as the required be-
ginning date for purposes of applying the
rules of this section and §1.401(a)(9)–2.
Thus, for example, the designated bene-
ficiary distributions will be determined as
of the annuity starting date. Similarly, if
the employee dies after the annuity starting
date but before the required beginning date
determined under A–2 of §1.401(a)(9)–2,
after the employee’s death, the remain-
ing portion of the employee’s interest must
continue to be distributed in accordance
with this section over the remaining pe-
riod over which distributions commenced.
The rules in §1.401(a)(9)–3 and section
401(a)(9)(B)(ii) or (iii) and (iv) do not ap-
ply.
(b)Period certain.If,asoftheem-
ployee’s birthday in the year that contains
the annuity starting date, the age of the em-
ployee is under 70, the following rule ap-
plies in applying the rule in paragraph (a)
of A–3 of this section. The applicable dis-
tribution period for the employee is the dis-
tribution period for age 70, determined in
accordance with the Uniform Lifetime Ta-
ble in A–2 of §1.401(a)(9)–9, plus the ex-
cess of 70 over the age of the employee as
of the employee’s birthday in the year that
contains the annuity starting date.
(c)Adjustment to employee/beneficiary
age difference. See A–2(c)(1) of this sec-
tion for the determination of the adjusted
employee/beneficiary age difference in the
case of an employee whose age on the an-
nuity starting date is less than 70.
Q–11. What rule applies if distribu-
tions commence to the surviving spouse of
an employee over a period permitted un-
der section 401(a)(9)(B)(iii)(II) before the
date on which distributions are required
to commence and the distribution form
is an annuity under which distributions
are made as of the date distributions com-
mence in accordancewith the provisions
of A–1 of this section.
A–11. If distributions commence to
the surviving spouse of an employee
over a period permitted under section
401(a)(9)(B)(iii)(II) before the date on
which distributions are required to com-
mence and the distribution form is an
annuity under which distributions are
made as of the date distributions com-
mence in accordance with the provisions
of A–1 of this section, distributions will
be considered to have begun on the actual
commencement date for purposes of sec-
tion 401(a)(9)(B)(iv)(II). Consequently,
in such case, A–5 of §1.401(a)(9)–3 and
section 401(a)(9)(B)(ii) and (iii) will not
applyuponthedeathofthesurviving
spouse as though the surviving spouse
were the employee. Instead, the annuity
distributions must continue to be made,
in accordance with the provisions of A–1
of this section, over the remaining period
over which distributions commenced.
Q–12. In the case of an annuity con-
tract under an individual account plan that
has not yet been annuitized, how is sec-
tion 401(a)(9) satisfied with respect to the
employee’s or beneficiary’s entire interest
under the annuity contract for the period
prior to the date annuity payments so com-
mence?
A–12. (a)General rule.Priortothe
date that an annuity contract under an in-
dividual account plan is annuitized, the
interest of an employee or beneficiary un-
der that contract is treated as an individual
account for purposes of section 401(a)(9).
Thus, the required minimum distribution
for any year with respect to that inter-
est is determined under §1.401(a)(9)–5
rather than this section. See A–1 of
§1.401(a)(9)–5 for rules relating to the
satisfaction of section 401(a)(9) in the
year that annuity payments commence and
A–2(a)(3) of §1.401(a)(9)–8.
(b)Entire interest. For purposes of ap-
plying the rules in §1.401(a)(9)–5, the en-
tire interest under the annuity contract as of
December 31 of the relevant valuation cal-
endar year is treated as the account balance
for the valuation calendar year described in
A–3 of §1.401(a)(9)–5. The entire inter-
est under an annuity contract is the dollar
amount credited to the employee or ben-
eficiary under the contract plus the actu-
arial present value of any additional bene-
fits (such as survivor benefits in excess of
the dollar amount credited to the employee
or beneficiary) that will be provided under
2004-26 I.R.B.1091June 28, 2004

the contract. However, paragraph (c) of
this A–12 describes certain additional ben-
efits that may be disregarded in determin-
ing the employee’s entire interest under
the annuity contract. The actuarial present
value of any additional benefits described
under this A–12 is to be determined us-
ing reasonable actuarial assumptions, in-
cluding reasonable assumptions as to fu-
ture distributions, and without regard to an
individual’s health.
(c)Exclusions. (1) The actuarial
present value of any additional bene-
fits provided under an annuity contract
described in paragraph (b) of this A–12
may be disregarded if the sum of the dollar
amount credited to theemployeeorbene-
ficiary under the contract and the actuarial
present value of the additional benefits
is no more than 120 percent of the dollar
amount credited to theemployeeorbene-
ficiary under the contract and the contract
provides only for the following additional
benefits:
(i) Additional benefits that, in the case
of a distribution, are reduced by an amount
sufficient to ensure that the ratio of such
sum to the dollar amount credited does not
increase as a result of the distribution, and
(ii) An additional benefit that is the right
to receive a final payment upon death that
does not exceed the excess of the premi-
ums paid less the amount of prior distribu-
tions.
(2) If the only additional benefit pro-
vided under the contract is the additional
benefit described in paragraph (c)(1)(ii) of
this A–14, the additional benefit may be
disregarded regardless of its value in re-
lationtothedollaramountcreditedtothe
employee or beneficiary under the con-
tract.
(3) The Commissioner in revenue
rulings, notices, or other guidance pub-
lished in the Internal Revenue Bulletin
(see §601.601(d)(2) of this chapter) may
provide additional guidance on additional
benefits that may be disregarded.
(d)Examples. The following examples,
which use a 5 percent interest rate and
the Mortality Table provided in Rev. Rul.
2001–62, 2001–2 C.B. 632, illustrate the
application of the rules in this A–12:
Example 1. (i) G is the owner of a variable an-
nuity contract (Contract S) under an individual ac-
count plan which has not been annuitized. Contract S
provides a death benefit until the end of the calendar
year in which the owner attains the age of 84 equal to
the greater of the current Contract S notional account
value (dollar amount credited to G under the contract)
and the largest notional account value at any previous
policy anniversary reduced proportionally for subse-
quent partial distributions (High Water Mark). Con-
tract S provides a death benefit in calendar years after
the calendar year in which the owner attains age 84
equal to the current notional account value. Contract
S provides that assets within the contract may be in-
vested in a Fixed Account at a guaranteed rate of 2
percent. Contract S provides no other additional ben-
efits.
(ii) At the end of 2008, when G has an attained
age of 78 and 9 months the notional account value of
Contract S (after the distribution for 2008 of 4.93% of
the notional account value as of December 31, 2007)
is $550,000, and the High Water Mark, before adjust-
ment for any withdrawals from Contract S in 2008
is $1,000,000. Thus, Contract S will provide addi-
tional benefits (i.e., the death benefits in excess of
the notional account value) through 2014, the year
S turns 84. The actuarial present value of these ad-
ditional benefits at the end of 2008 is determined
to be $84,300 (15 percent of the notional account
value). In making this determination, the following
assumptions are made: on the average, deaths occur
mid-year; the investment return on his notional ac-
count value is 2 percent per annum; and minimum
required distributions (determined without regard to
additional benefits under the Contract S) are made at
the end of each year. The following table summarizes
the actuarial methodology used in determining the ac-
tuarial present value of the additional benefit.
YearDeath
Benefit
During
Year
End-of-Year
Notional
Account
Before
Withdrawal
Average
Notional
Account
Withdrawal
at
End of Year
End-of-Year
Notional
Account
After
Withdrawal
2008
$1,000,000$550,000
2009
$ 950,739
1
$561,000
2
$555,500
3
$28,205
4
$532,795
2010
$ 901,983$543,451$538,123$28,492$514,959
2011
$ 853,749$525,258$520,109$28,769$496,490
2012
$ 806,053$506,419$501,454$29,034$477,385
2013
$ 758,916$486,933$482,159$29,287$457,645
2014
$ 712,356$466,798$462,222$29,525$437,273
YearSurvivorship
to Start
of Year
Interest
Discount
to End
of 2008
Mortality
Rate
During
Year
Discounted
Additonal
Benefits
Within Year
2008
20091.00000
.97590
.04426
5
$17,070
2010
.95574
.92943
6
.04946
$15,987
7
2011.90847
8
.88517.05519
$14,807
2012
.85833
.84302.06146
$13,546
2013
.80558
.80288.06788
$12,150
2014
.75090
.76464.07477
$10,739
$84,30
0
1 $1,000,000 death benefit reduced 4.93 percent for withdrawal during 2008.
2 Noti
onal account value at end of prior year (after distribution) increased by 2 percent return for year.
June 28, 200410922004-26 I.R.B.

3 Average of $550,000 notional account value at end of prior year (after distribution) and $561,000 notional account value at end of current year (before
distribution).
4 December 31, 2008, notional account (before distribution) divided by uniform lifetime table age 79 factor of 19.5.
5 One-quarter a
ge 78 rate plus three-quarters age 79 rate.
6 Five percent discounted 18 months (1.05^(-1.5)).
7 Blended age 79/age 80 mortality rate (.04946) multiplied by the $363,860 excess of death benefit over the average notional account value (901,983 less 538,123)
multiplied by
.95574 probability of survivorship to the start of 2010 multiplied by 18 month interest discount of .92943.
8 Survivorship to start of preceding year (.95574) multiplied by probability of survivorship during prior year (1 - .04946).
(iii) Because Contract S provides that, in the case
of a distribution, the value of the additional death ben-
efit (which is the o
nly additional benefit available un-
der the contract) is reduced by an amount that is at
least proportional to the reduction in the notional ac-
count value and, a
t age 78 and 9 months, the sum
of the notional account value (dollar amount cred-
ited to the employee under the contract) and the actu-
arial present va
lue of the additionaldeath benefit is no
more than 120 percent of the notional account value,
the exclusion under paragraph (c)(2) of this A–12 is
applicable for 200
9. Therefore, for purposes of ap-
plying the rules in §1.401(a)(9)–5, the entire interest
under Contract S may be determined as the notional
account value (i.
e., without regard to the additional
death benefit).
Example 2. (i)Thefactsarethesameasin
Example 1except t
hat the notional account value is
$450,000 at the end of 2008. In this instance, the
actuarial present value of the death benefit in excess
of the notional acc
ount value in 2008 is determined
to be $108,669 (24 percent of the notional account
value). The following table summarizes the actu-
arial methodolog
y used in determining the actuarial
present value of the additional benefit.
YearDeath
Benefit
During
Year
End-of-Year
Notional
Account
Before
Withdrawal
Average
Notional
Account
Withdrawal
at
End of Year
End-of-Year
Notional
Account
After
Withdrawal
2008
$1,000,000$450,000
2009
$ 950,739$459,000$454,500$23,077$435,923
2010
$ 901,983$444,642$440,282$23,311$421,330
2011
$ 853,749$429,757$425,543$23,538$406,219
2012
$ 806,053$414,343$410,281$23,755$390,588
2013
$ 758,916$398,399$394,494$23,962$374,437
2014
$ 712,356$381,926$378,181$24,157$357,768
YearSurvivorship
to Start
of Year
Interest
Discount
to End
of 2008
Mortality
Rate
During
Year
Discounted
Additional
Benefits
Within Year
2008
20091.00000
.97590
.04426
$21,432
2010
.95574
.92943.04946
$20,286
2011.90847
.88517.05519
$19,004
2012
.85833
.84302.06146
$17,601
2013
.80558
.80288.06788
$15,999
2014
.75090
.76464.07477
$14,347
$108,669
(ii) Because the sum of the notional account bal-
ance and the actuarial present value of the additional
death benefit is more than 120 percent of the notional
account value, the exclusion under paragraph (b)(1)
of this A–12 does not apply for 2009. Therefore, for
purposes of applying the rules in §1.401(a)(9)–5, the
entire interest under Contract S must include the ac-
tuarial present value of the additional death benefit.
Q–13. When can an annuity payment
period be changed?
A–13. (a)In general. An annuity pay-
ment period may be changed in accordance
with the provisions set forth in paragraph
(b)ofthisA–13orinassociationwith
an annuity payment increase described in
A–14 of this section.
(b)Reannuitization. If, in a stream
of annuity payments that otherwise satis-
fies section 401(a)(9), the annuity payment
period is changed and the annuity pay-
ments are modified in association with that
change, this modification will not cause
the distributions to fail to satisfy section
401(a)(9) provided the conditions set forth
in paragraph (c) of this A–13 are satisfied,
and either —
(1) The modification occurs at the time
that the employee retires or in connection
with a plan termination;
(2) The annuity payments prior to mod-
ification are annuity payments paid over a
period certain without life contingencies;
or
(3) The annuity payments after modifi-
cation are paid under a qualified joint and
survivor annuity over the joint lives of the
employee and a designated beneficiary, the
employee’s spouse is the sole designated
beneficiary, and themodification occurs in
connection with theemployee becoming
marriedtosuchspouse.
(c)Conditions. In order to modify a
stream of annuity payments in accordance
with paragraph (b) of this A–13, the fol-
lowing conditions must be satisfied —
2004-26 I.R.B.1093June 28, 2004

(1) The future payments under the mod-
ified stream satisfy section 401(a)(9) and
this section (determined by treating the
date of the change as a new annuity starting
date and the actuarial present value of the
remaining payments prior to modification
as the entire interest of the participant);
(2) For purposes of sections 415 and
417, the modification is treated as a new
annuity starting date;
(3) After taking into account the mod-
ification, the annuity stream satisfies sec-
tion 415 (determined at the original annu-
ity starting date, using the interest rates and
mortality tables applicable to such date);
and
(4) The end point of the period certain,
if any, for any modified payment period is
not later than the end point available under
section 401(a)(9) to the employee at the
original annuity starting date.
(d)Examples. For the following exam-
ples in this A–13, assume that the Appli-
cable Interest Rate throughout the period
from 2005 through 2008 is 5 percent and
throughout 2009 is 4 percent, the Applica-
ble Mortality Table throughout the period
from 2005 to 2009 is the table provided in
Rev. Rul. 2001–62, 2001–2 C.B. 632, and
the section 415 limit in 2005 at age 70 for
a straight life annuity is $255,344:
Example 1. (i) A participant (D), who has 10
years of participation in a frozen defined benefit plan
(Plan W), attains age 70
1
/2in 2005. D is not retired
and elects to receive distributions from Plan W in the
form of a straight life (i.e., level payment) annuity
with annual payments of $240,000 per year beginning
in 2005 at a date when D has an attained age of 70.
Plan W offers non-retired employees in pay status the
opportunity to modify their annuity payments due to
an associated change in the payment period at retire-
ment. Plan W treats the date of the change in payment
period as a new annuity starting date for the purposes
of sections 415 and 417. Thus, for example, the plan
provides a new qualified and joint survivor annuity
election and obtains spousal consent.
(ii) Plan W determines modifications of annuity
payment amounts at retirement such that the present
value of future new annuity payment amounts (tak-
ing into account the new associated payment period)
is actuarially equivalent to the present value of future
pre-modification annuity payments (taking into ac-
count the pre-modification annuity payment period).
Actuarial equivalency for this purpose is determined
using the Applicable Interest Rate and the Applicable
Mortality Table as of the date of modification.
(iii) D retires in 2009 at the age of 74 and, after
receiving four annual payments of $240,000, elects
to receive his remaining distributions from Plan W
in the form of an immediate final lump sum payment
(calculated at 4 percent interest) of $2,399,809.
(iv) Because payment of retirement benefits in the
form of an immediate final lump sum payment satis-
fies (in terms of form) section 401(a)(9), the condi-
tion under paragraph (c)(1) of this A–13 is met.
(v) Because Plan W treats a modification of an
annuity payment stream at retirement as a new annu-
ity starting date for purposes of sections 415 and 417,
the condition under paragraph (c)(2) of this A–13 is
met.
(vi) After taking into account the modification,
the annuity stream determined as of the original an-
nuity starting date consists of annual payments be-
ginning at age 70 of $240,000, $240,000, $240,000,
$240,000, and $2,399,809. This benefit stream is ac-
tuarially equivalent to a straight life annuity at age 70
of $250,182, an amount less than the section 415 limit
determined at the original annuity starting date, us-
ing the interest and mortality rates applicable to such
date. Thus, the condition under paragraph (c)(3) of
this A–13 is met.
(vii) Thus, because a stream of annuity payments
in the form of a straight life annuity satisfies section
401(a)(9), and because each of the conditions under
paragraph (c) of this A–13 are satisfied, the modifi-
cation of annuity payments to D described in this ex-
ample meets the requirements of this A–13.
Example 2. The facts are the same as inExample
1except that the straight life annuity payments are
paid at a rate of $250,000 per year and after D retires
the lump sum payment at age 75 is $2,499,801. Thus,
after taking into account the modification, the annu-
ity stream determined as of the original annuity start-
ing date consists of annual payments beginning at age
70 of $250,000, $250,000, $250,000, $250,000, and
$2,499,801. This benefit stream is actuarially equiva-
lent to a straight life annuity at age 70 of $260,606, an
amount greater than the section 415 limit determined
at the original annuity starting date, using the interest
and mortality rates applicable to such date. Thus, the
lump sum payment to D fails to satisfy the condition
under paragraph (c)(3) of this A–13. Therefore, the
lump sum payment to D fails to meet the requirements
of this A–13 and thus fails to satisfy the requirements
of section 401(a)(9).
Example 3. (i) A participant (E), who has 10 years
of participation in a frozen defined benefit plan (Plan
X), attains age 70
1
/2and retires in 2005 at a date when
his attained age is 70. E elects to receive annual dis-
tributions from Plan X in the form of a 27 year period
certain annuity (i.e., a 27 year annuity payment period
without a life contingency) paid at a rate of $37,000
per year beginning in 2005 with future payments in-
creasing at a rate of 4 percent per year (i.e., the 2006
payment will be $38,480, the 2007 payment will be
$40,019 and so on). Plan X offers participants in pay
status whose annuity payments are in the form of a
term-certain annuity the opportunity to modify their
payment period at any time and treats such modifica-
tions as a new annuity starting date for the purposes
of sections 415 and 417. Thus, for example, the plan
provides a new qualified and joint survivor annuity
election and obtains spousal consent.
(ii) Plan X determines modifications of annuity
payment amounts such that the present value of fu-
ture new annuity payment amounts (taking into ac-
count the new associated payment period) is actuari-
ally equivalent to the present value of future pre-mod-
ification annuity payments (taking into account the
pre-modification annuity payment period). Actuarial
equivalency for this purpose is determined using 5
percent and the Applicable Mortality Table as of the
date of modification.
(iii) In 2008, E, after receiving annual payments
of $37,000, $38,480, and $40,019, elects to receive
his remaining distributions from Plan W in the form
of a straight life annuity paid with annual payments
of $92,133 per year.
(iv) Because payment of retirement benefits in
the form of a straight life annuity satisfies (in terms
of form) section 401(a)(9), the condition under para-
graph (c)(1) of this A–13 is met.
(v) Because Plan X treats a modification of an an-
nuity payment stream at retirement as a new annuity
starting date for purposes of sections 415 and 417, the
condition under paragraph (c)(2) of this A–13 is met.
(vi) After taking into account the modification,
the annuity stream determined as of the original an-
nuity starting date consists of annual payments be-
ginning at age 70 of $37,000, $38,480, $40,019, and
a straight life annuity beginning at age 73 of $92,133.
This benefit stream is equivalent to a straight life an-
nuity at age 70 of $82,539, an amount less than the
section 415 limit determined at the original annuity
starting date, using the interest and mortality rates ap-
plicable to such date. Thus, the condition under para-
graph (c)(3) of this A–13 is met.
(vii) Thus, because a stream of annuity payments
in the form of a straight life annuity satisfies section
401(a)(9), and because each of the conditions under
paragraph (c) of this A–13 are satisfied, the modifi-
cation of annuity payments to E described in this ex-
ample meets the requirements of this A–13.
Q–14. Are annuity payments permitted
to increase?
A–14. (a)General rules. Except as oth-
erwise provided in this section, all annu-
ity payments (whether paid over an em-
ployee’s life, joint lives, or a period cer-
tain) must be nonincreasing or increase
only in accordance with one of more of the
following —
(1) With an annual percentage increase
that does not exceed the percentage in-
crease in an eligible cost-of-living index as
defined in paragraph (b) of this A–14 for a
12-month period ending in the year during
which the increase occurs or the prior year;
(2) With a percentage increase that oc-
curs at specified times (e.g., at specified
ages) and does not exceed the cumulative
total of annual percentage increases in an
eligible cost-of-living index as defined in
paragraph (b) of this A–14 since the an-
nuity starting date, or if later, the date of
the most recent percentage increase. How-
ever, in cases providing such a cumulative
increase, an actuarial increase may not be
provided to reflect the fact that increases
were not provided in the interim years;
(3) To the extent of the reduction in
the amount of the employee’s payments to
provide for a survivor benefit, but only if
there is no longer a survivor benefit be-
June 28, 200410942004-26 I.R.B.

cause the beneficiary whose life was be-
ing used to determine the period described
in section 401(a)(9)(A)(ii) over which pay-
ments were being made dies or is no longer
the employee’s beneficiary pursuant to a
qualified domestic relations order within
the meaning of section 414(p);
(4) To pay increased benefits that result
from a plan amendment;
(5) To allow a beneficiary to convert
the survivor portion of a joint and survivor
annuity into a single sum distribution upon
the employee’s death; or
(6) To the extent increases are permitted
in accordance with paragraph (c) or (d) of
this A–14.
(b)(1) For purposes of this A–14, an el-
igible cost-of-living index means an index
described in paragraphs (b)(2), (b)(3), or
(b)(4) of this A–14.
(2) A consumer price index that is based
on prices of all items (or all items exclud-
ing food and energy) and issued by the Bu-
reau of Labor Statistics, including an index
for a specific population (such as urban
consumers or urban wage earners and cler-
ical workers) and an index for a geographic
area or areas (such as a given metropolitan
area or state).
(3) A percentage adjustment based on
a cost-of-living index described in para-
graph (b)(2) of this A–14, or a fixed per-
centage if less. In any year when the
cost-of-living index is lower than the fixed
percentage, the fixed percentage may be
treated as an increase in an eligible cost-of-
living index, provided it does not exceed
the sum of:
(i) The cost-of-living index for that
year, and
(ii) The accumulated excess of the an-
nual cost-of-living index from each prior
year over the fixed annual percentage
used in that year (reduced by any amount
previously utilized under this paragraph
(b)(3)(ii)).
(4) A percentage adjustment based on
the increase in compensation for the po-
sition held by the employee at the time
of retirement, and provided under either
the terms of a governmental plan within
the meaning of section 414(d) or under the
terms of a nongovernmental plan as in ef-
fect on April 17, 2002.
(c)Additional permitted increases for
annuity payments under annuity contracts
purchased from insurance companies.In
the case of annuity payments paid from an
annuity contract purchased from an insur-
ance company, if the total future expected
payments (determined in accordance with
paragraph (e)(3) of this A–14) exceed
the total value being annuitized (within
the meaning of paragraph (e)(1) of this
A–14) , the payments under the annuity
will not fail to satisfy the nonincreasing
payment requirement in A–1(a) of this
section merely because the payments are
increased in accordance with one or more
of the following—
(1) By a constant percentage, applied
not less frequently than annually;
(2) To provide a final payment upon the
death of the employee that does not ex-
ceed the excess of the total value being an-
nuitized (within the meaning of paragraph
(e)(1) of this A–14) over the total of pay-
ments before the death of the employee;
(3) As a result of dividend payments
or other payments that result from actu-
arial gains (within the meaning of para-
graph (e)(2) of this A–14), but only if ac-
tuarial gain is measured no less frequently
than annually and the resulting dividend
payments or other payments are either paid
no later than the year following the year for
which the actuarial experience is measured
or paid in the same form as the payment
of the annuity over the remaining period
of the annuity (beginning no later than the
year following the year for which the actu-
arial experience is measured); and
(4) An acceleration of payments under
the annuity (within the meaning of para-
graph (e)(4) of this A–14).
(d)Additional permitted increases for
annuity payments from a qualified trust.In
the case of annuity payments paid under a
defined benefit plan qualified under sec-
tion 401(a) (other than annuity payments
under an annuity contract purchased from
an insurance company that satisfy para-
graph (c) of this section), the payments
under the annuity will not fail to satisfy
the nonincreasing payment requirement in
A–1(a) of this section merely because the
payments are increased in accordance with
one of the following —
(1) By a constant percentage, applied
not less frequently than annually, at a rate
that is less than 5 percent per year;
(2) To provide a final payment upon the
death of the employee that does not exceed
the excess of the actuarial present value
of the employee’s accrued benefit (within
the meaning of section 411(a)(7)) calcu-
lated as the annuity starting date using the
applicable interest rate and the applicable
mortality table under section 417(e) (or, if
greater, the total amount of employee con-
tributions) over the total of payments be-
fore the death of the employee; or
(3) As a result of dividend payments
or other payments that result from actu-
arial gains (within the meaning of para-
graph (e)(2) of this A–14), but only if —
(i) Actuarial gain is measured no less
frequently than annually;
(ii) The resulting dividend payments or
other payments are either paid no later than
the year following the year for which the
actuarial experience is measured or paid
in the same form as the payment of the
annuity over the remaining period of the
annuity (beginning no later than the year
following the year for which the actuarial
experience is measured);
(iii) The actuarial gain taken into ac-
count is limited to actuarial gain from in-
vestment experience;
(iv) The assumed interest used to calcu-
late such actuarial gains is not less than 3
percent; and
(v) The payments are not increasing by
a constant percentage as described in para-
graph (d)(1) of this A–14.
(e)Definitions. For purposes of this
A–14, the following definitions apply —
(1) Total value being annuitized
means —
(i) In the case of annuity payments un-
der a section 403(a) annuity plan or under
a deferred annuity purchased by a section
401(a) trust, the value of the employee’s
entire interest (within the meaning of A–12
of this section) being annuitized (valued as
of the date annuity payments commence);
(ii) In the case of annuity payments
under an immediate annuity contract pur-
chased by a trust for a defined benefit plan
qualified under section 401(a), the amount
of the premium used to purchase the con-
tract; and
(iii) In the case of a defined contribution
plan, the value of the employee’s account
balance used to purchase an immediate an-
nuity under the contract.
(2) Actuarial gain means the difference
between an amount determined using the
actuarial assumptions (i.e., investment re-
turn, mortality, expense, and other simi-
lar assumptions) used to calculate the ini-
tial payments before adjustment for any in-
creases and the amount determined under
2004-26 I.R.B.1095June 28, 2004

the actual experience with respect to those
factors. Actuarial gain also includes dif-
ferences between the amount determined
using actuarial assumptions when an an-
nuity was purchased or commenced and
such amount determined using actuarial
assumptions used in calculating payments
at the time the actuarial gain is determined.
(3) Total future expected payments
means the total future payments expected
to be made under the annuity contract as
of the date of the determination, calcu-
lated using the Single Life Table in A–1
of §1.401(a)(9)–9 (or, if applicable, the
Joint and Last Survivor Table in A–3 of
in §1.401(a)(9)–9) for annuitants who are
still alive, without regard to any increases
in annuity payments after the date of de-
termination, and taking into account any
remaining period certain.
(4) Acceleration of payments means a
shortening of the payment period with re-
spect to an annuity or a full or partial com-
mutation of the future annuity payments.
An increase in the payment amount will be
treated as an acceleration of payments in
the annuity only if the total future expected
payments under the annuity (including the
amount of any payment made as a result of
the acceleration) is decreased as a result of
the change in payment period.
(f)Examples. Paragraph (c) of this
A–14 is illustrated by the following exam-
ples:
Example 1. Variable annuity. A retired partici-
pant (Z1) in defined contribution plan X attains age
70 on March 5, 2005, and thus, attains age 70
1
/2in
2005. Z1 elects to purchase annuity Contract Y1 from
Insurance Company W in 2005. Contract Y1 is a sin-
gle life annuity contract with a 10-year period cer-
tain. Contract Y1 provides for an initial annual pay-
ment calculated with an assumed interest rate (AIR)
of 3 percent. Subsequent payments are determined
by multiplying the prior year’s payment by a fraction
the numerator of which is 1 plus the actual return on
the separate account assets underlying Contract Y1
since the preceding payment and the denominator of
which is 1 plus the AIR during that period. The value
of Z1’s account balance in Plan X at the time of pur-
chase is $105,000, and the purchase price of Contract
Y1 is $105,000. Contract Y1 provides Z1 with an
initial payment of $7,200 at the time of purchase in
2005. The total future expected payments to Z1 un-
der Contract Y1 are $122,400, calculated as the initial
payment of $7,200 multiplied by the age 70 life ex-
pectancy of 17 provided in the Single Life Table in
A–1 of §1.401(a)(9)–9. Because the total future ex-
pected payments on the purchase date exceed the to-
tal value used to purchase Contract Y1 and payments
may only increase as a result of actuarial gain, with
such increases, beginning no later than the next year,
paid in the same form as the payment of the annuity
over the remaining period of the annuity, distributions
received by Z1 from Contract Y1 meet the require-
ments under paragraph (c)(3) of this A–14.
Example 2. Participating annuity. A retired par-
ticipant (Z2) in defined contribution plan X attains
age 70 on May 1, 2005, and thus, attains age 70
1
/2in
2005. Z2 elects to purchase annuity Contract Y2 from
Insurance Company W in 2005. Contract Y2 is a par-
ticipating single life annuity contract with a 10-year
period certain. Contract Y2 provides for level annual
payments with dividends paid in a lump sum in the
year after the year for whichthe actuarial experience
is measured or paid out levelly beginning in the year
after the year for which the actuarial gain is measured
over the remaining lifetime and period certain,i.e.,
the period certain ends at the same time as the original
period certain. Dividends are determined annually by
the Board of Directors of Company W based upon a
comparison of actual actuarial experience to expected
actuarial experience in the past year. The value of
Z2’s account balance in Plan X at the time of pur-
chase is $265,000, and the purchase price of Contract
Y2 is $265,000. Contract Y2 provides Z2 with an
initial payment of $16,000 in 2005. The total future
expected payments to Z2 under Contract Y2 are cal-
culated as the annual initial payment of $16,000 mul-
tiplied by the age 70 life expectancy of 17 provided
in the Single Life Table in A–1 of §1.401(a)(9)–9 for
a total of $272,000. Because the total future expected
payments on the purchase date exceeds the total value
used to purchase Contract Y2 and payments may only
increase as a result of actuarial gain, with such in-
creases, beginning no later than the next year, paid
in the same form as the payment of the annuity over
the remaining period of the annuity, distributions re-
ceived by Z2 from Contract Y2 meet the requirements
under paragraph (c)(3) of this A–14.
Example 3. Participating annuity with dividend
accumulation. The facts are the same as inExample
2except that the annuity provides a dividend accu-
mulation option under which Z2 may defer receipt of
the dividends to a time selected by Z2. Because the
dividend accumulation option permits dividends to be
paid later than the end of the year following the year
for which the actuarial experience is measured or as
a stream of payments that only increase as a result
of actuarial gain, with such increases beginning no
later than the next year, paid in the same form as the
payment of the annuity over the remaining period of
the annuity inExample 2, the dividend accumulation
option does not meet the requirements of paragraph
(c)(3) of this A–14. Neither does the dividend accu-
mulation option fit within any of the other increases
described in paragraph (c) of this A–14. Accordingly,
the dividend accumulation option causes the contract,
and consequently any distributions from the contract,
to fail to meet the requirements of this A–14 and thus
fail to satisfy the requirements of section 401(a)(9).
Example 4. Participating annuity with dividends
used to purchase additional death benefits. The facts
are the same as inExample 2except that the annuity
provides an option under which actuarial gain under
the contract is used to provide additional death ben-
efit protection for Z2. Because this option permits
payments as a result of actuarial gain to be paid later
than the end of the year following the year for which
the actuarial experience is measured or as a stream
of payments that only increase as a result of actuarial
gain, with such increases beginning no later than the
next year, paid in the same form as the payment of the
annuity over the remaining period of the annuity in
Example 2, the option does not meet the requirements
of paragraph (c)(3) of this A–14. Neither does the op-
tion fit within any of the other increases described in
paragraph (c) of this A–14. Accordingly, the addition
of the option causes the contract, and consequently
any distributions from the contract, to fail to meet the
requirements of this A–14 and thus fail to satisfy the
requirements of section 401(a)(9).
Example 5. Annuity with a fixed percentage in-
crease. A retired participant (Z3) in defined contri-
bution plan X attains age 70
1
/2in 2005. Z3 elects to
purchase annuity contract Y3 from Insurance Com-
pany W. Contract Y3 is a single life annuity contract
with a 20-year period certain (which does not exceed
the maximum period certain permitted under A–3(a)
of this section) with fixed annual payments increasing
3 percent each year. The value of Z3’s account bal-
ance in Plan X at the time of purchase is $110,000,
and the purchase price of Contract Y3 is $110,000.
Contract Y3 provides Z3 with an initial payment of
$6,000 at the time of purchase in 2005. The total fu-
ture expected payments toZ3 under Contract Y3 are
$120,000, calculated as the initial annual payment of
$6,000 multiplied by the period certain of 20 years.
Because the total future expected payments on the
purchase date exceed the total value used to purchase
Contract Y3 and payments only increase as a constant
percentage applied not less frequently than annually,
distributions received by Z3 from Contract Y3 meet
the requirements under paragraph (c)(1) of this A–14.
Example 6. Annuity with excessive increases.
ThefactsarethesameasinExample 5except that
the initial payment is $5,400 and the annual rate
of increase is 4 percent. In this example, the total
future expected payments are $108,000, calculated
as the initial payment of $5,400 multiplied by the
period certain of 20 years. Because the total future
expected payments are less than the total value of
$110,000 used to purchase Contract Y3, distributions
received by Z3 do not meet the requirements under
paragraph (c) of this A–14 and thus fail to meet the
requirements of section 401(a)(9).
Example 7. Annuity with full commutation fea-
ture. (i) A retired participant (Z4) in defined contri-
bution Plan X attains age 78 in 2005. Z4 elects to
purchase Contract Y4 from Insurance Company W.
Contract Y4 provides for a single life annuity with
a 10 year period certain (which does not exceed the
maximum period certain permitted under A–3(a) of
this section) with annual payments. Contract Y4 pro-
vides that Z4 may cancel Contract Y4 at any time be-
fore Z4 attains age 84, and receive, on his next pay-
ment due date, a final payment in an amount deter-
mined by multiplying the initial payment amount by
a factor obtained from Table M of Contract Y4 using
the Y4’s age as of Y4’s birthday in the calendar year
of the final payment. The value of Z4’s account bal-
ance in Plan X at the time of purchase is $450,000,
and the purchase price of Contract Y4 is $450,000.
Contract Y4 provides Z4 with an initial payment in
2005 of $40,000. The factors in Table M are as fol-
lows:
June 28, 200410962004-26 I.R.B.

Age at Final PaymentFactor
79
10.5
8010.0
81
9.5
829.0
83
8.5
848.0
(ii) The total future expected payments to Z4 un-
der Contract Y4 are $456,000, calculated as the initial
payment of 40,000 multiplied by the age 78 life ex-
pectancy of 11.4 provided in the Single Life Table in
A–1 of §1.401(a)(9)–9. Because the total future ex-
pected payments on the purchase date exceed the total
value being annuitized (i.e., the $450,000 used to pur-
chase Contract Y4), the permitted increases set forth
in paragraph (c) of this A–14 are available. Further-
more, because the factors in Table M are less than the
life expectancy of each of the ages in the Single Life
Table provided in A–1 of §1.401(a)(9)–9, the final
payment is always less than the total future expected
payments. Thus, the final payment is an acceleration
of payments within the meaning of paragraph (c)(4)
of this A–14.
(iii) As an illustration of the above, if Participant
Z4 were to elect to cancel Contract Y4 on the day
before he was to attain age 84, his contractual final
payment would be $320,000. This amount is deter-
mined as $40,000 (the annual payment amount due
under Contract Y4) multiplied by 8.0 (the factor in
Table M for the next payment due date, age 84). The
total future expected payments under Contract Y4 at
age 84 before the final payment is $324,000, calcu-
lated as the initial payment amount multiplied by 8.1,
the age 84 life expectancy provided in the Single Life
Table in A–1 of §1.401(a)(9)–9. Because $320,000
(the total future expected payments under the annuity
contract, including the amount of the final payment)
is less than $324,000 (the total future expected pay-
ments under the annuity contract, determined before
the election), the final payment is an acceleration of
payments within the meaning of paragraph (c)(4) of
this A–14.
Example 8. Annuity with partial commutation
feature. (i) The facts are the same as inExample 7
except that the annuity provides Z4 may request, at
any time before Z4 attains age 84, an ad hoc pay-
ment on his next payment due date with future pay-
ments reduced by an amount equal to the ad hoc pay-
ment divided by the factor obtained from Table M
(fromExample 7) corresponding to Z4’s age at the
time of the ad hoc payment. Because, at each age,
the factors in Table M are less than the corresponding
life expectancies in the Single Life Table in A–1 of
§1.401(a)(9)–9, total future expected payments under
Contract Y4 will decrease after an ad hoc payment.
Thus, ad hoc distributions received by Z4 from Con-
tract Y4 will satisfy the requirements under paragraph
(c)(4) of this A–4.
(ii) As an illustration of paragraph (i) of thisEx-
ample 8,ifZ4weretorequest,onthedaybeforehe
was to attain age 84, an ad hoc payment of $100,000
on his next payment due date, his recalculated an-
nual payment amount would be reduced to $27,500.
This amount is determined as $40,000 ( the amount
of Z4’s next annual payment) reduced by $12,500
(his $100,000 ad hoc payment divided by the Table
M factor at age 84 of 8.0). Thus, Z4’s total future
expected payments after the ad hoc payment (and in-
cluding the ad hoc payment) are equal to $322,750
($100,000 plus $27,500 multiplied by the Single Life
Table value of 8.1). Note that this $322,750 amount
is less than the amount of Z4’s total future expected
payments before the ad hoc payment ($324,000, de-
termined as $40,000 multiplied by 8.1), and the re-
quirements under paragraph (c)(4) of this A–4 are sat-
isfied.
Example 9. Annuity with excessive increases.(i)
A retired participant (Z5) in defined contribution plan
X attains age 70
1
/2in 2005. Z5 elects to purchase
annuity Contract Y5 from Insurance Company W in
2005 with a premium of $1,000,000. Contract Y5 is
a single life annuity contract with a 20-year period
certain. Contract Y5 provides for an initial payment
of $200,000, a second payment one year from the
time of purchase of $40,000, and 18 succeeding an-
nual payments each increasing at a constant percent-
age rate of 4.5 percent from the preceding payment.
(ii) Contract Y5 fails to meet the requirements of
section 401(a)(9) because the total future expected
payments without regard to any increases in the annu-
ity payment, calculated as $200,000 in year one and
$40,000 in each of years two through twenty, is only
$960,000 (i.e., an amount that does not exceed the to-
tal value used to purchase the annuity).
Q–15. Are there special rules applica-
ble to payments made under a defined ben-
efit plan or annuity contract to a surviving
child?
A–15. Yes, Pursuant to section
401(a)(9)(F), payments under a defined
benefit plan or annuity contract that are
made to an employee’s child until such
child reaches the age of majority (or dies,
if earlier) may be treated, for purposes
of section 401(a)(9), as if such payments
were made to the surviving spouse to the
extent they become payable to the surviv-
ing spouse upon cessation of the payments
to the child. For purposes of the preceding
sentence, a child may be treated as having
not reached the age of majority if the child
has not completed a specified course of
education and is under the age of 26. In
addition, a child who is disabled within
themeaningofsection72(m)(7)whenthe
child reaches the age of majority may be
treated as having not reached the age of
majority so long as the child continues to
be disabled. Thus, when payments de-
scribed in this paragraph A–15 become
payable to the surviving spouse because
the child attains the age of majority, re-
covers from a disabling illness, dies, or
completes a specified course of education,
there is not an increase in benefits under
A–1 of this section. Likewise, the age of
child receiving such payments is not taken
into consideration for purposes of the min-
imum incidental benefit requirement of
A–2 of this section.
Q–16. Will a governmental plan within
the meaning of section 414(d) fail to sat-
isfy section 401(a)(9) if annuity payments
under the plan do not satisfy this section?
A–16. (a) Except as provided in para-
graph (b) of this A–16, annuity payments
under a governmental plan within the
meaning of section 414(d) must satisfy
this section.
(b) In the case of an annuity distribu-
tion option provided under the terms of a
governmental plan as in effect on April 17,
2002, the plan will not fail to satisfy sec-
tion 401(a)(9) merely because the annuity
payments do not satisfy the requirements
A–1 through A–15 of this section, pro-
vided the distribution option satisfies sec-
tion 401(a)(9) based on a reasonable and
good faith interpretation of the provisions
of section 401(a)(9).
Q–17. What are the rules for determin-
ing required minimum distributions for de-
fined benefit plans and annuity contracts
for calendar years 2003, 2004, and 2005?
A–17. A distribution from a defined
benefit plan or annuitycontract for calen-
dar years 2003, 2004, and 2005 will not fail
to satisfy section 401(a)(9) merely because
the payments do not satisfy A–1 through
A–16 of this section, provided the pay-
ments satisfy section 401(a)(9) based on
a reasonable and good faith interpretation
of the provisions of section 401(a)(9). For
governmental plans, this reasonable good
faith standard extends to the end of the cal-
endar year that contains the 90
th
day after
the opening of the first legislative session
of the legislative body with the authority to
amend the plan that begins on or after June
2004-26 I.R.B.1097June 28, 2004

15, 2004, if such 90
th
day is later than De-
cember 31, 2005.
§1.401(a)(9)–6T [Removed]
Par. 4. Section 1.401(a)(9)–6T is re-
moved.
Par. 5. In §1.401(a)(9)–8 A–2, the first
sentence in paragraph (a)(2) is revised to
read as follows:
§1.401(a)(9)–8 Special rules.
*****
A–2***
(a) * * *
(2) If the employee’s benefit in a de-
fined contribution plan is divided into sep-
arate accounts and the beneficiaries with
respect to one separate account differ from
the beneficiaries with respect to the other
separate accounts of the employee under
the plan, for years subsequent to the cal-
endar year containing the date as of which
the separate accounts were established, or
date of death if later, such separate account
under the plan is not aggregated with the
other separate accounts under the plan in
order to determine whether the distribu-
tions from such separate account under the
plan satisfy section 401(a)(9). * * *
*****
Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.
Approved June 1, 2004.
Gregory F. Jenner,
Acting Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on June 14, 2004,
8:45 a.m., and published in the issue of the Federal Register
for June 15, 2004, 69 F.R. 33288)
Section 861.—Income
From Sources Within the
United States
A revenue procedure provides a method for allo-
cating a pension payment to sources within and with-
out the United States when a domestic trust under a
qualified defined benefit plan makes a payment with
respect to a nonresident alien participant and the ac-
tual amounts of employer contributions made to the
plan for the benefit of such participant are not known.
See Rev. Proc. 2004-37, page 1099.
Section 862.—Income
From Sources Without
the United States
A revenue procedure provides a method for allo-
cating a pension payment to sources within and with-
out the United States when a domestic trust under a
qualified defined benefit plan makes a payment with
respect to a nonresident alien participant and the ac-
tual amounts of employer contributions made to the
plan for the benefit of such participant are not known.
See Rev. Proc. 2004-37, page 1099.
Section 871.—Tax
on Nonresident Alien
Individuals
A revenue procedure provides a method for allo-
cating a pension payment to sources within and with-
out the United States when a domestic trust under a
qualified defined benefit plan makes a payment with
respect to a nonresident alien participant and the ac-
tual amounts of employer contributions made to the
plan for the benefit of such participant are not known.
See Rev. Proc. 2004-37, page 1099.
Section 1441.—Withholding
of Tax on Nonresident Aliens
A revenue procedure provides a method for allo-
cating a pension payment to sources within and with-
out the United States when a domestic trust under a
qualified defined benefit plan makes a payment with
respect to a nonresident alien participant and the ac-
tual amounts of employer contributions made to the
plan for the benefit of such participant are not known.
See Rev. Proc. 2004-37, page 1099.
June 28, 200410982004-26 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
26 CFR 1.861–4: Compensation for labor or per-
sonal services.
(Also: Part I, sections 861, 862, 871, 1441.)
Rev. Proc. 2004–37
SECTION 1. PURPOSE
This revenue procedure provides a
method for determining the source of a
pension payment to a nonresident alien in-
dividual from a defined benefit plan where
the trust forming part of the plan is a trust
created or organized in the United States
that constitutes a qualified trust under
§ 401(a) of the Internal Revenue Code.
SECTION 2. BACKGROUND
Section 871(a) imposes a tax of 30
percent on amounts received by nonres-
ident alien individuals as interest (other
than original issue discount as defined
in § 1273), dividends, rents, salaries,
wages, premiums, annuities, compensa-
tions, remunerations, emoluments, and
other fixed or determinable annual or pe-
riodical gains, profits, and income to the
extent the amount so received is from
sources within the United States and is
not effectively connected with the conduct
of a trade or business within the United
States.
Section 1441(a) provides for the with-
holding of tax, generally at a 30 percent
rate, on certain income from sources
within the United States paid to a nonresi-
dent alien individual. Section 1441(b) lists
salaries, wages, annuities, compensations,
remunerations, or other fixed or deter-
minable annual or periodical gains, among
other things, as items of income subject to
the withholding of tax under § 1441(a).
Section 1.1441–4(b)(1)(ii) of the In-
come Tax Regulationsprovides generally
that U.S.-source payments to a nonresident
alien individual from a trust described in
§ 401(a) are subject to withholding under
§ 1441. But see § 871(f) (excluding from
income certain amounts received from
certain qualified plans); § 1.1441–4(d)
(excluding such amounts from withhold-
ing).
Section 861(a)(3) provides generally
that compensation for labor or personal
services performed in the United States is
treated as income from sources within the
United States. Section 862(a)(3) provides
that compensation for labor or personal
services performed outside the United
States is treated as income from sources
without the United States.
Employer contributions to an annuity
or pension plan constitute compensation
for labor or personal services. See,e.g.,
Rev. Rul. 56–82, 1956–1 C.B. 59. For
purposes of determining the source of pen-
sion payments from a qualified trust under
§ 401(a), the portion of each payment that
is attributable to employer contributions
with respect to services rendered within
the United States is treated as income
from sources within the United States, the
portion that is attributable to employer
contributions with respect to services ren-
dered outside the United States is treated as
income from sources without the United
States, and the portion that represents
earnings and accretions to contributions
of either the employer or the employee is
treated as income from sources within the
United States. Rev. Rul. 79–388, 1979–2
C.B. 270.See also,Clayton v. United
States, 33 Fed. Cl. 628 (1995),aff’d with-
out published opinion,91F.3d170(Fed.
Cir. 1996),cert. denied, 519 U.S. 1040
(1996).
Employer contributions to a defined
benefit plan qualified under § 401(a) cov-
ering more than one individual participant
are not made for the benefit of specific
participants, but are made based on ag-
gregate liabilities toall participants. All
funds held under the plan are available to
provide benefits to any participant. Ac-
cordingly, it is not possible in such a case
to allocate actual contributions to specific
participants.
SECTION 3. SCOPE
.01General application. If a trust under
a qualified defined benefit plan makes a
payment with respect to a participant who
is a nonresident alien individual and the
actual amounts of employer contributions
made to the plan for the benefit of such
participant are not known, the method set
forth in section 4 of this revenue proce-
duremaybeusedtoallocatethepayment
to sources within and without the United
States. The method set forth in section
4 is based on methods similar to those
used for purposes of §§ 1.403(b)–1(d)(4),
1.402(b)–1(a)(2), and 1.402(b)–1(b)(2)(ii)
of the Income Tax Regulations when con-
tributions for the benefit of a particular par-
ticipant are not known.
.02Application to a possession of the
United States. The method set forth in
section 4 of this revenue procedure also
may be used for purposes of allocating
a payment from a trust under a qualified
defined benefit plan to sources within
and without a possession of the United
States. See § 1.863–6 (providing that
the principles applied for determining in-
come from sources within and without the
United States are generally applied for pur-
poses of determining income from sources
within and without a possession). Thus,
for example, in the case of a payment from
a trust under a qualified defined benefit
plan to abona fideresident of Puerto Rico,
the method set forth in section 4 may be
used for purposes of determining what
portion of the payment is derived from
sources within Puerto Rico and therefore
excludible from the recipient’s gross in-
come under § 933(1).
SECTION 4. METHOD
.01Determination of total contribu-
tions. The amount of total contributions
to a defined benefit plan for the benefit of
a particular individual is deemed to be the
product of the following three quantities
multiplied by one another, each such quan-
tity determined as of the annuity starting
date—
(i) the present value of the individual’s
pension payable at the annuity starting
date, determined under section 4.02;
(ii) the amount from Table I below
based on the number of years from the
first date the individual became a partic-
ipant in the plan to the annuity starting
date (representing the amount that, when
contributed on an annual level basis, will
accumulate to $1.00 at the annuity starting
date); and
(iii) the number of years from the first
date the individual became a participant in
the plan to the annuity starting date.
.02Present value of pension. (a) If pay-
ment is made in the form of a straight life
2004-26 I.R.B.1099June 28, 2004

annuity commencingat the annuity start-
ing date, then the present value of the in-
dividual’s pension is the product of (i) the
amount payable annually, multiplied by
(ii) the value from Table II below, based
on the individual’s age at the annuity start-
ing date, of an annuity of $1.00 per annum
payable in equal monthly installments dur-
ing the life of the individual.
(b)Ifpaymentismadeintheformof
a single-sum payment of the total bene-
fit due to the individual under the plan at
the annuity starting date, then the present
value of the individual’s pension is equal
to the amount of the single-sum payment.
(c)Ifpaymentismadeinaformnot
identified in either of the two preced-
ing paragraphs, then the present value of
the individual’s pension is the actuarial
present value of the individual’s pension,
determined on the annuity starting date
based on a 7% rate of interest and the mor-
tality table in Rev. Rul. 2001–62, 2001–2
C.B. 632.
.03Tables.
Table I.— Amount that, when con-
tributed on an annual level basis, will
accumulate to $1.00 at the annuity starting
date, based on the total number of years
from the first date the individual became
a participant in the plan to the annuity
starting date
Number o
f Years
Amount
1
$1.0000
20.4831
30.3111
40.2252
50.1739
60.1398
70.1156
80.0975
90.083
5
100.0724
110.0634
120.055
9
130.0497
140.0443
150.03
98
160.0359
170.0324
180.0
294
190.0268
200.0244
2
1
0.
0223
220.0204
230.0187
2
4
0.
0172
250.0158
260.0146
270.0134
280.0124
290.0115
300.0106
310.0098
June 28, 200411002004-26 I.R.B.

Number of YearsAmount
320.0091
330.0084
340.0078
350.0072
360.0067
370.0062
380.0058
390.0054
400.0050
410.0047
420.0043
430.0040
440.0038
450.0035
460.0033
470.0030
480.0028
490.0026
500.0025
Table II.— The value of an annuity of
$1.00 per annum payable in equal monthly
installments during the life of the individ- ual, based on the individual’s age at the an-
nuity starting date.
Age at Annuity Starting DateValue
4013.61
4113.54
4213.46
4313.38
4413.29
4513.20
4613.11
4713.00
4812.89
4912.78
5012.66
5112.53
5212.40
5312.25
5412.11
5511.95
2004-26 I.R.B.1101June 28, 2004

Age at Annuity Starting DateValue
5611.79
5711.62
5811.45
5911.26
6011.08
6110.88
6210.68
6310.48
6410.27
6510.06
669.84
679.62
689.40
699.17
708.93
718.69
728.44
738.18
747.92
757.65
767.38
777.10
786.83
796.55
806.28
.04Allocation of payments to sources
within and without the United States.
(a)General rule. The portion of each
payment that is deemed to be attributable
to contributions for services rendered out-
side the United States, and thus treated as
income from sources without the United
States, is equal to the quotient of (i) the
product of (A) the total deemed contribu-
tions (as determined under section 4.01
of this revenue procedure), multiplied by
(B) a fraction, the numerator of which is
the months of service credited under the
plan that were rendered outside the United
States and the denominator of which is
the total months of service credited un-
der the plan as of the annuity starting
date (i.e., prorated based on months of
service rendered within and without the
United States), divided by (ii) the present
value of the pension at the annuity starting
date (as determined under section 4.02
of this revenue procedure). The remain-
der of the payment, which represents the
sum of deemed contributions for services
rendered within the United States plus
earnings on all contributions, is treated as
income from sources within the United
States.
(b)Special rule for employee after-tax
contributions. If the participant has made
any employee after-tax contributions to the
plan, then each payment is first reduced by
the employee after-tax contributions allo-
cable to such payment under § 72. The por-
tion of the remainder of each payment that
is treated as income from sources with-
out the United States is equal to the quo-
tient of (i) the product of (A) the excess of
the total contributions (as determined un-
der section 4.01 of this revenue procedure)
over the total employee after-tax contribu-
tions to the plan, multiplied by (B) a frac-
tion, the numerator of which is the num-
ber of months of service credited under the
plan that were rendered outside the United
States and the denominator of which is the
total months of service credited under the
plan at the annuity starting date, divided
by (ii) the excess of the present value of
the pension at the annuity starting date (as
determined under section 4.02 of this rev-
enue procedure) over the total employee
after-tax contributions to the plan. The
portion of each payment that is allocable
neither to employee after-tax contributions
nor to income from sources without the
United States is treated as income from
sources within the United States.
June 28, 200411022004-26 I.R.B.

SECTION 5. EXAMPLES
.01Retirement at age 65.(a)Facts.
P, a nonresident alien individual, is a cit-
izen and resident of Country B. P will be
age 65 on December 31, 2004. There is
no income tax treaty in force between the
United States and Country B.
P has been an employee of Company
X, a domestic corporation, since 1975
and is retiring on December 31, 2004. P
worked in Company X’s branch office in
Country B from January 1, 1975, through
December 31, 1984. On January 1, 1985,
P was transferred to the United States
to work at Company X’s headquarters.
While P worked in the United States, P
was classified as a resident alien under
§ 7701(b)(1)(A)(ii). On January 1, 1995,
P was transferred back to Company X’s
branch office in Country B, where P will
have worked until retiring on December
31, 2004. In total, P will have worked
360 months for Company X, including
240 months worked in Country B and 120
months worked in the United States.
Throughout P’s employment by Com-
pany X, P has been a participant in a de-
fined benefit plan (“Plan A”) maintained
by Company X. The trust forming part of
Plan A is a trust created or organized in
the United States that constitutes a qual-
ified trust under § 401(a). The normal
form of retirement benefit under Plan A is
a straight life annuity. The amount payable
under the straight life annuity form is an
annual benefit of 1 percent of highest-five
years’ pay multiplied by years of service
credited under the plan, payable monthly
for life commencing at normal retirement
age (age 65) or at actual retirement age, if
later. Plan A provides for an actuarially re-
duced amount to be payable if the partici-
pant has a severance from employment be-
fore normal retirement age, but the reduc-
tion is smaller if the participant retires after
age 55 with at least 20 years of service (for
example, only a 16.67% reduction applies
at age 55). Contributions under Plan A are
not made on behalf of specific individual
participants.
P is entitled to a monthly pension from
Plan A beginning at age 65, the annual
amount of which will be $30,000 payable
as a straight life annuity. P elects to re-
ceive payment of that pension in the form
of a straight life annuity commencing im-
mediately. P has never made any after-tax
contributions to Plan A, and § 871(f), re-
lating to an exclusion from gross income
for certain amounts received from certain
qualified pension plans, does not apply to
any amounts received by P from Plan A.
(b)Application. The total deemed con-
tributions for the benefit of P under the
method set forth in section 4.01 of this rev-
enue procedure equal $95,972, which is
the product of $301,800 (the present value
of P’s pension benefit from Plan A under
section 4.02(a), computed as the product of
$30,000 multiplied by 10.06, which is the
applicable adjustment factor under Table
II of section 4.03), multiplied by 0.0106
(the number from Table I that corresponds
to the total number of years of accumula-
tion for P before the annuity starting date),
multiplied by 30 (P’s total years of service
credited under the plan). Under section
4.04 of this revenue procedure, the portion
of each payment that is treated as income
from sources without the United States is
equal to the quotient of (i) the product of
240/360 multiplied by $95,972, divided by
(ii) $301,800, or 21 percent. The remain-
ing 79 percent is treated as income from
sources within the United States that is
subject to withholding under § 1441(a).
.02Early Retirement.(a)Facts.The
facts with respect to Plan A and Company
XarethesameasinExample 5.01.Q,
a nonresident alien individual, is a citi-
zen and resident of Country B. Q will be
age 55 on December 31, 2004. There is
no income tax treaty in force between the
United States and Country B.
Q has been an employee of Company
X since 1985 and is retiring on Decem-
ber 31, 2004. Q worked in Company
X’s branch office in Country B from Jan-
uary 1, 1985, through December 31, 1994.
On January 1, 1995, Q was transferred
to the United States to work at Company
X’s headquarters. While Q worked in the
United States, Q was classified as a resi-
dent alien under § 7701(b)(1)(A)(ii). On
September 1, 2001, Q was transferred back
to Company X’s branch office in Country
B, where Q will have worked until retir-
ing on December 31, 2004. In total, Q
will have worked 240 months for Com-
pany X, including 160 months worked in
Country B and 80 months worked in the
United States.
Throughout Q’s employment by Com-
pany X, Q has been a participant in Plan
A.Qisentitledtoamonthlypension
from Plan A beginning at age 55, the an-
nual amount of which will be $25,000
payable as a straight life annuity. Q elects
to receive an actuarially equivalent joint
and contingent annuity option of $23,000
annually with a 50 percent continuation
percentage (and Q’s designated contin-
gent annuitant is age 55) and the actuarial
present value of that benefit under section
4.02(c) is $288,019. Q has never made
any after-tax contributions to Plan A, and
§ 871(f), relating to an exclusion from
gross income for amounts received from
certain qualified pension plans, does not
apply to any amounts received by Q from
Plan A.
(b)Application. The total deemed con-
tributions for the benefit of Q under the
method set forth in section 4.01 of this
revenue procedure equal $140,553, which
is the product of $288,019 (the present
value of Q’s $23,000 annual pension bene-
fit from Plan A with a 50-percent continu-
ation percentage, as determined under the
assumptions in section 4.02(c)), multiplied
by 0.0244 (the number from Table I that
corresponds to the total number of years
of accumulation for Qbefore the annuity
starting date), multiplied by 20 (Q’s total
years of service credited under the plan).
Under section 4.04 of this revenue proce-
dure, the portion of each payment that is
treated as income fromsources without the
United States is equal to the quotient of (i)
160/240 multiplied by $140,553, divided
by (ii) $288,019, or 33 percent. The re-
maining 67 percent is treated as income
from sources within the United States that
is subject to withholding under § 1441(a).
SECTION 6. LIMITATION ON
ISSUANCE OF PRIVATE LETTER
RULINGS
.01 The Service will not issue a private
letter ruling regarding a method for deter-
mining the source of a pension payment to
a nonresident alien individual from a trust
under a defined benefit plan that is quali-
fied under § 401(a) if the proposed method
(including the related assumptions) is in-
consistent with sections 4.01, 4.02, and
4.03 of this revenue procedure.
.02 Revenue Procedure 2004–7,
2004–1 I.R.B. 237, is amplified by adding
the following to section 3.01:
Section 861. Income from Sources
Within the United States. A method
2004-26 I.R.B.1103June 28, 2004

for determining the source of a pension
payment to a nonresident alien individ-
ual from a trust under a defined bene-
fit plan that is qualified under § 401(a)
if the proposed method is inconsistent
with sections 4.01, 4.02, and 4.03 of
Revenue Procedure 2004–37, 2004–26
I.R.B. 1099.
Section 862. Income from Sources
Without the United States. A method
for determining the source of a pension
payment to a nonresident alien individ-
ual from a trust under a defined benefit
plan that is qualified under § 401(a)
if the proposed method is inconsistent
with sections 4.01, 4.02, and 4.03 of
Revenue Procedure 2004–37, 2004–26
I.R.B. 1099.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Michelle S. Lyon of the
Office of Associate Chief Counsel (Inter-
national). However, other personnel from
the IRS and Treasury Department par-
ticipated in its development. For further
information regarding this revenue proce-
dure generally, contact Ms. Lyon at (202)
622–3880 (not a toll-free call). For infor-
mation regarding computations under the
method set forth in section 4 of this rev-
enue procedure, contact Diane S. Bloom
at (202) 283–9888 (not a toll-free call).
June 28, 200411042004-26 I.R.B.

Part IV. Items of General Interest
Foundations Status of Certain
Organizations
Announcement 2004–53
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations
in the Cumulative List of Organizations
(Publication 78), or on the presumption
arising from the filing of notices under sec-
tion 508(b) of the Code. This listing does
notindicate that the organizations have lost
their status as organizations described in
section 501(c)(3), eligible to receive de-
ductible contributions.
Former Public Charities.The follow-
ing organizations (which have been treated
as organizations thatare not private foun-
dations described in section 509(a) of the
Code) are now classified as private foun-
dations:
Abraham Lincoln National Cemetery
Support Committee, Joliet, IL
Advocates of Bay County Boot Camp,
Inc., Panama City, FL
After Three Program Multi-Agency
Coalition, Inc., Lithonia, GA
Alliance for Innovation, Northville, MI
Alms-Way Ministries, Farmington, GA
Alpha Omega Development Corp.,
Racine, WI
Alyans Atizay Ayisyn, Inc., Miami, FL
Alzheimer Associates Enterprise,
Fairfield, OH
Ambassador Ministries, Inc., Milford, MA
American Academic Alliance for Israel,
Inc., New York, NY
American Amateur Indexed Golf
Association, Stafford, TX
American Association for Caregiver
Education, Inc., Boca Raton, FL
American Foundation Researching
International Conservation of Animals,
Slaughtern, LA
American Friends of Bais Hamedresh
Taharos, Monsey, NY
American Home Care Services, Inc.,
Los Angeles, CA
American Humanitarian Development
Association, Charlotte, NC
American Sports Fans Foundation, Inc.,
Boca Raton, FL
American Youth Racing, Lakewood, OH
Animal Preservation Foundation, Inc.,
New York, NY
Arc Angels of Flagler, Inc., Bunnell, FL
Art Moves Media, Alexandria, VA
Asatta and Cosmo Rescued Animals
Sanctuary, Inc., Bronx, NY
Asociacion Cultural El Salvador,
Sacramento, CA
Aspen-Olive Community Development
Corp., Philadelphia, PA
Association Against Homeless in
America, Seattle, WA
Association of Certified Fraud
Examiners Central Arkansas Chapter,
Little Rock, AR
Atela Corporation, Quincy, FL
Avitronic Nav-Com, Inc., Ozark, AL
Awele Foundation International,
Baltimore, MD
B & R Intergenerational Care Center,
Kansas City, MO
Back to the Workplace, Inc.,
St. Louis, MO
Bangor Housing Community Action
Team, Bangor, ME
Baskett Recreation League, Inc.,
Henderson, KY
Befitnet Alliance, Incorporated,
Sayreville, NJ
Benton County Re-Entry School, Inc.,
Bentonville, AR
Bestside Manor, Inc., Fort Collins, CO
Biddy Mason Institute, Los Angeles, CA
Big Brothers Big Sisters of Puerto Rico,
San Juan, PR
Bob Crawford Scholarship Fund,
Rochester, NY
Bonnie Loch, Princeton, ME
Boundary Large Canine Society,
British Columbia, Canada
Bread of Life, Royal, NE
Brentwood Lions Charities, Inc.,
Brentwood, TN
Bright Dreams International, Dallas, TX
B S R Memorial Trust, Brooklyn, NY
Bullthistle Model Railroad Society, Inc.,
Norwich, NY
Bush Grove Missionary Baptist Church
Food Service, Arlington, TN
Cache Booster Club, Cache, OK
Cardiology Associates Foundation,
New York, NY
Caregivers in Touch, Inc., Anniston, AL
Caritas of Yucaipa, Irvine, CA
Carrick Band Boosters Association, Inc.,
Pittsburgh, PA
Cats Wrestling Boosters Club, Chico, CA
Center for Community and Business
Development, Inc., Bronx, NY
Centro Latino, New Bedford, MA
Cheeseborough Striders, Nashville, TN
Chester Square Neighborhood
Association, Inc., Boston, MA
Chi State Learning Is For Everyone
Foundation, Sacramento, CA
Clannada Na Gadelica, Chattanooga, TN
Clearwater Family Youth Center, Inc.,
Piedmont, MO
Coalition for Children, Inc.,
Royal Palm Beach, FL
Colorado Golf for Charities Fund,
Littleton, CO
Colorado House of Ruth, Incorporated,
Littleton, CO
Colossus of Boston H 9, Portland, ME
Columbus Multimedia Communication
Network, Columbus, OH
Communities Receiving Support, Inc.,
Jacksonville, FL
Community Concerts of St. Tammany,
Ltd., Mandeville, LA
Community Outreach Youth Center, Inc.,
Pompano Beach, FL
Computers for Educators, Inc.,
Sterling, MA
Conejo Valley Chorale, Oak Park, CA
Corpus Christi Foundation of Holland
Zealand, Holland, MI
Country Care Homes, Pequot Lakes, MN
Creative Photographic Society,
Rancho Palos Verdes, CA
Crisis Institute, New Orleans, LA
Dade-Monroe Wages Coalition, Inc.,
Miami, FL
Delco Associates Limited, Wollaston, MA
Decisions in Democracy International,
Exeter, NH
Delray Beach Lions Foundation, Inc.,
Delray Beach, FL
Desales Housing Corp., New Orleans, LA
Dewitt County Cares, Inc., Cuero, TX
Dick Marx Foundation,
Sherman Oaks, CA
Dog Project and Cat Project, Inc.,
Port Washington, NY
Dovetail Christian Ministries, Inc.,
Cazenovia, NY
2004-26 I.R.B.1105June 28, 2004

East Boston Gateway, E. Boston, MA
East Carolina Junior Volleyball Club, Inc.,
Winterville, NC
East Pond Association, Augusta, ME
Eastern Long Island Coastal Conservation
Alliance, Inc., Southampton, NY
Education Through Awareness, Inc.,
Simi Valley, CA
Efficientime Life Management,
Los Angeles, CA
Efforts United, Inc., Lynn, MA
Elliston Community Development Corp.,
Memphis, TN
Empowerment Institute, Inc.,
Columbia, MO
Fairplex Development, Los Angeles, CA
Families and Individuals Turning Toward
Hope, Inc., Vorhees, NJ
Family Recovery Centers Endowment
Fund, Inc., Lisbon, OH
Figure Skating Foundation,
Lake Arrowhead, CA
Flora D. Parrish Foundation, Tucson, AZ
Foundation for Family Happiness,
Arlington, VA
Foundation for the Enhancement
of Excellence in Education, Inc.,
New Orleans, LA
Franklin County Community Ministerial
Alliance, Inc., Apalachicola, FL
Fred McClerklin Ministries, Inc.,
Columbia, SC
Friends of St. Francis of Assisi,
Louisville, KY
Friends of the Grand County Childrens
Justice Center, Moab, UT
Gables Radiology Research and
Educational Foundation, Inc.,
Coral Gables, FL
Gateway Youth Athletic Association,
Huntington, MA
Genesis Community Awareness Center,
Inc., Hialeah, FL
Georgetown Revitalization Committee,
Georgetown, CA
Get a Life Evangelistic Association,
Concord, CA
Gibson Court Housing Corporation,
Ukiah, CA
Giles County Farmland Preservation
Trust, Pulaski, TN
Global Dialogue Institute, Gladwyne, PA
Global Health Foundation,
Springville, UT
Global Life Enhancement Center, Inc.,
Atlanta, GA
Gosplosion, Inc., Lakeland, FL
Great Bay Stewards at Sandy Point, Inc.,
Stratham, NH
GreatHeart Scouts, Inc., Starkville, MS
Green Light Foundation, Newport, RI
Guardian Eldercare, Brockway, PA
Guiding Light Community Development
Corporation, Houston, TX
Hands on Production, Inc., Lexington, KY
Hared’s Helpful Hands, Minneapolis, MN
Harvest Christian Center, Pearl, MS
Harvester Community Development
Corporation, Decatur, GA
Hearts & Horses Therapeutic Riding
Center, Buxton, ME
Helping Hands Coalition of Greater
Newport News, Inc., Newport News, VA
Helpmate USA, New York, NY
Herb Skolnick Cultural Arts Foundation,
Inc., Pompano Beach, FL
Historic Bowman Mill Neighborhood
Association, Inc., Lexington, KY
Historic Edgefield, Inc., Nashville, TN
HIV AIDS Mendocino Coast Project,
Fort Bragg, CA
Hopkinton Arts & Music Festival,
Contoocook, NH
I Am Somebody Pantry, Inc., Dallas, TX
Institute for Plant Based Nutrition,
Bala Cynwyd, PA
Institutional Community Development
Corporation, Cleveland, OH
Interactive Community Development,
Garland, TX
International Institute of Forestry and
Agriculture, Springville, UT
Internationally Advancing Mankind,
Garland, TX
Jack & Jill Day Care Preschool,
Pine Bluff, AR
Jeanine L. Webb Memorial Scholarship,
Waverly, TN
Joyful Manor, Inc., Houma, LA
Jumpstart Sports Club, Inc., Campbell, CA
Keystone Housing Corporation,
Logansport, IN
Kids in Distress Foundation, Incorporated,
Wilton Manors, FL
LaReche Foundation, Brooklyn, NY
Lauderdale County Education Foundation,
Ripley, TN
Learning Center Newington,
Newington, NH
Lighthouse Confidence Center,
Chiefland, FL
Lil Flowers Child Development Center,
Sacramento, CA
Lillie Stoates Awards, Inc., Orlando, FL
Lions of District 22–C Student Honor
Band, Inc., Frederick, MD
Long Beach Film Foundation,
Long Beach, CA
Los Siervos Resale Non Profit
Corporation, Vista, CA
Louisiana Association for Community
Economic Development,
Baton Rouge, LA
Luminous Group, Inc., New York, NY
Maloata Village Native Community
Poultry Development, Inc.,
Pago Pago, AS
Mane Effect Therapeutic Riding Center,
Inc., Kaukauna, WI
Mark E. King Medical Research
Foundation, LaVerne, CA
Marsin Forest Grove Conservatory,
Houghton, MI
Mary Diana Samuel Corporation,
Cleveland, TN
Media Arts International, Inc.,
Long Island City, NY
Mercy Home Healthcare, Memphis, TN
Merrimack Valley Small Business
Development Council, Inc.,
Lawrence, MA
Metropolitan Interdenominational
Ministers Conference, Inc.,
Brooklyn, NY
Mexican Children’s Home & Clinic, Inc.,
San Antonio, TX
Michigan Panthers Baseball Club, Inc.,
Wixom, MI
Mid-South Sheltered Workshop,
Jonesboro, AR
Mid-South Youth Baseball, Inc.,
Millington, TN
Minnesota Skating Scholarship,
Edina, MN
Monona Foster and Adoptive Parents
Association, Sergeant Bluff, IA
Mound Bottom Press, Pegram, TN
Mountian Regional Council on Aging,
Blue Jay, CA
MRC Parents Association, Inc.,
Miami, FL
MS Warrior, San Francisco, CA
Mt. Lebanon, Inc., Memphis, TN
Mt. Sinai Rmue Outreach Ministries,
Orangeburg, SC
Muhammads Development Corporation,
Springfield, MA
National Association of Christian
Educators, Inc., Hendersonville, TN
Native American Mentoring Enterprise,
Provo, UT
June 28, 200411062004-26 I.R.B.

New Agreement Community
Development Corporation, Houston, TX
New Covenant Urban and Disabled
Community Services, Inc.,
Santa Diego, CA
New Creations Development Programs,
Inc., Fern Creek, KY
New Directors Charity Group, Inc.,
Pacific Palisades, CA
New Fiction Project, Inc., New York, NY
New Hampshire Sports Museum
Corporation, Manchester, NH
New Hope Ranch A Non Profit
Corporation, Chattaroy, WA
New Horizons Housing and Independent
Living, North Hollywood, CA
New Life Family Shelter, Inc., Miami, FL
New Life, Inc., Reno, NV
Nguoi Viet Foundation, Westminster, CA
Noahs Ark Abundant Resource Kare
Foundation, Springville, UT
Nor-Cal Elite, Wheatland, CA
Norpoint Soccer Club, Tacoma, WA
North American Institute for Performance
Education, Concord, NH
North Pine Street Senior Housing
Corporation, Ukiah, CA
Northern Arizona Celtic Heritage Society,
Flagstaff, AZ
Northern Illinois Tejano Cultural Society,
Inc., Aurora, IL
Nubian Foundation, Austin, TX
Nutrition Education Worldwide,
Chicago, IL
Oikodome Ministries, Moreno Valley, CA
Olathe Volleyball Club, Inc., Olathe, KS
Open Door Dance Theatre,
Los Angeles, CA
Operation Foundation, Agusta, GA
Operation Lemon-Aid, Inc.,
Highland Park, IL
Or-Letzion, Brooklyn, NY
Orange Bowl Foundation, Inc., Miami, FL
Orlando Caribbean Masqueraders
Association, Inc., Orlando, FL
OrotYehuda,NewYork,NY
Orphanages of Thailand, Inc., Stanton, CA
Oxford Academy Corp., Shrewsbury, MA
Park West Residents Association,
Vernon Rockville, CT
Patches of Sunshine Animal Sanctuary,
Inc., Memphis, TN
Pathway Ministries, Ltd., Barre, VT
People With Pride, Ontario, CA
Performance Gallery, Inc., New York, NY
Peter Beck Memorial Scholarship Fund,
Galt, CA
Philippine American Federation of South
Florida, Inc., North Miami, FL
Pinkie Unlimited, Berkeley, CA
Portland Opera Repertory Theatre,
Portland, ME
Praxis the Official Tribute to Mark
Lenard, Pittsburgh, PA
Press Freedom Foundation,
North Miami, FL
Preventive Mentoring Services,
Dallas, TX
Professional Education and Credentialing,
Inc., Baton Rouge, LA
Project New Start, Chicago, IL
Project Real, Washington, DC
Project Respect, Inc., Hailey, ID
Providercare, Gorham, ME
Pround2Be,Cerritos,CA
PSI Applications, Fairfield, CA
PSI Tau Chapter Foundation of Omega
PSI Phi Fraternity, Inc., Lexington, KY
Public Lands Equal Access Alliance –
PLEAA, Springville, UT
Queens Division of Hatzolo, Inc.,
New York, NY
Rainier Valley Community Development
Association, Seattle, WA
Ray of Hope, Dallas, TX
Recycle Otsego County, Gaylord, MI
Restoration Fellowship, Fayetteville, GA
Rick Hughes Evangelistic Ministries, Inc.,
Cropwell, AL
Riverview Gardens Educational
Foundation, CO John Kulla-Branz,
Saint Louis, MO
Road Scholars, Inc., Harrington Park, NJ
Rochester Recovery Center, Inc.,
Rochester, NY
Romema Torah Center, Inc.,
New York, NY
Royal Lancers Ventage Dance Troup,
Ofallon, MO
Russell County Foundation for
Excellence, Inc., Russell Springs, KY
Rxaprescription Anonymous, Inc.,
Columbia, MD
San Francisco Friends of Chamber Music,
San Francisco, CA
Sanctuary at the Water Garden, Cary, NC
Sandra and Jesse Jackson Jr., Foundation,
Washington, DC
Search Research Discover Apply
Academy, Inc., Tulsa, OK
Second Great Gold Rush Foundation,
Inc., Sacramento, CA
Second Step Transition House, Detroit, MI
Senior Services, Inc., Cortland, OH
Seniornet Sarasota Learning Center,
Bradenton, FL
Serrano Band of Indians, Highland, CA
SF Chinatown Leo Club Big Sibling
Program, Mountain View, CA
Sierra Supported Services, Inc.,
Susanville, CA
Silver Charitable Fund, Inc.,
Los Angeles, CA
SingleWomenWithChildren
Organization, Inc., Raleigh, NC
Small-Felder-Minifield Training Center,
Inc., of Tuskegee, Memphis, TN
Smart Coalition of California,
Sacramento, CA
Smashing Athletes Booster Club, Inc.,
Miami, FL
Solid Rock Academy, Inc.,
Port Sulphur, LA
South Florida Chapter of the Association
of Jewish Libraries, Miami, FL
Southeast North Carolina Jazz-N-Friends,
Incorporated, Fayetteville, NC
Southern California Diamonds Softball
Club, Thousand Oaks, CA
Southwest Musical Arts Foundation,
Scottsdale, AZ
Space Needle Volleyball Foundation,
Seattle, WA
Spring Hill Arts Center, Spring Hill, TN
St. Bernard Coalition for Project
Graduation, Inc., Chalmette, LA
St. Paul Community Economic
Development St. Paul Partners,
St. Louis, MO
Stand & Be Counted, Inc., Palmdale, CA
Step by Step Day Care and Learning
Center, Inc., Midland City, AL
Stop Employee Abuse Association,
Plano, TX
Succeed America, Inc., S. Attleboro, MA
Suitlandfest Community Development
Corporation, Suitland, MD
Summit Seekers, Inc., Fishers, IN
Sumter Learning Center, York, AL
Sunglo Concepts of Care, Inc.,
Harlingen, TX
S W A M Cultural Center, New York, NY
Sword Ministries, Arlington, TX
Teatro Main Street, Inc., Fort Worth, TX
Technology R & D, Inc.,
San Louis Obispo, CA
Tennessee Main Street Association, Inc.,
Lawrenceburg, TN
Tigers Only Preservation Society,
Clarksburg, NJ
Tikar, Inc., Temple, TX
2004-26 I.R.B.1107June 28, 2004

Transformations Project, Inc.,
Jamaica Plain, MA
Transitional Services, Inc., Secretary, MD
Tri City Project T E A C H,
Winston Salem, NC
Tuscawarus Educational Development,
Inc., New Philadelphia, OH
United World Charities, Allentown, PA
Until Its Time, Richmond, VA
Upper Cumberland Access, Inc.,
Sparta, TN
Urban Empire, Inc., New York, NY
Urban Hope, Grand Rapids, MI
USA Tennis Classic, San Bruno, CA
Utah Therapeutic Riding Foundation,
Draper, UT
Victims Team Advocacy of Osage County
Oklahoma, Inc., Pawhuska, OK
Violeta Barrios De Chamorro Foundation,
Inc., Pittsburgh, PA
Vision Advancement Foundation, Inc.,
Bartlesville, OK
Visions Plus, Inc., Portsmouth, VA
Walpole Youth Basketball Association,
Inc., Walpole, MA
Washington Court Senior Housing
Corporation, Ukiah, CA
WBD Save the Childrens Lives,
Houston, TX
We Have Risen Ministry, Bartlette, TN
West High Athletic Alumni Association,
Anchorage, AK
Willis Adult Family Care Home, Inc.,
Midway, FL
Wilmington Community Roundtable
Foundation, Inc., Wilmington, MA
Womenpower, Portland, ME
Woodland Chamber of Commerce 21st
Century Foundation, Woodland, CA
World Concern With Compassion, Inc.,
New York, NY
World Future Fund, Inc., Alexandria, VA
World Peace Museum, Greensboro, NC
Youth Incentive Program, Inc.,
Brunswick, GA
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as
a private operating foundation, the Inter-
nalRevenueServicewillissuearulingor
determinationletterwiththerevisedclas-
sification as to foundation status. Grantors
and contributors may thereafter rely upon
such ruling or determination letter as pro-
videdinsection1.509(a)–7oftheIncome
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
June 28, 200411082004-26 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2004-26 I.R.B.iJune 28, 2004

Numerical Finding List
1
Bulletins 2004–1 through 2004–26
Announcements:
2004-1, 2004-1 I.R.B.254
2004-2, 2004-3 I.R.B.322
2004-3, 2004-2 I.R.B.294
2004-4, 2004-4 I.R.B.357
2004-5, 2004-4 I.R.B.362
2004-6, 2004-3 I.R.B.322
2004-7, 2004-4 I.R.B.365
2004-8, 2004-6 I.R.B.441
2004-9, 2004-6 I.R.B.441
2004-10, 2004-7 I.R.B.501
2004-11, 2004-10 I.R.B.581
2004-12, 2004-9 I.R.B.541
2004-13, 2004-9 I.R.B.543
2004-14, 2004-10 I.R.B.582
2004-15, 2004-11 I.R.B.612
2004-16, 2004-13 I.R.B.668
2004-17, 2004-12 I.R.B.635
2004-18, 2004-12 I.R.B.639
2004-19, 2004-13 I.R.B.668
2004-20, 2004-13 I.R.B.673
2004-21, 2004-13 I.R.B.673
2004-22, 2004-14 I.R.B.709
2004-23, 2004-13 I.R.B.673
2004-24, 2004-14 I.R.B.714
2004-25, 2004-15 I.R.B.737
2004-26, 2004-15 I.R.B.743
2004-27, 2004-14 I.R.B.714
2004-28, 2004-16 I.R.B.818
2004-29, 2004-15 I.R.B.772
2004-30, 2004-17 I.R.B.833
2004-31, 2004-18 I.R.B.854
2004-32, 2004-18 I.R.B.860
2004-33, 2004-18 I.R.B.862
2004-34, 2004-19 I.R.B.895
2004-35, 2004-17 I.R.B.839
2004-36, 2004-20 I.R.B.932
2004-37, 2004-17 I.R.B.839
2004-38, 2004-18 I.R.B.878
2004-39, 2004-17 I.R.B.840
2004-40, 2004-17 I.R.B.840
2004-41, 2004-18 I.R.B.879
2004-42, 2004-17 I.R.B.840
2004-43, 2004-21 I.R.B.955
2004-44, 2004-21 I.R.B.957
2004-45, 2004-21 I.R.B.958
2004-46, 2004-21 I.R.B.964
2004-47, 2004-21 I.R.B.966
2004-48, 2004-22 I.R.B.998
2004-49, 2004-21 I.R.B.966
2004-50, 2004-22 I.R.B.1005
2004-51, 2004-23 I.R.B.1041
2004-52, 2004-24 I.R.B.1071
Announcements— Continued:
2004-53, 2004-26 I.R.B.1105
2004-54, 2004-24 I.R.B.1061
Court Decisions:
2078, 2004-16 I.R.B.773
2079, 2004-22 I.R.B.978
Notices:
2004-1, 2004-2 I.R.B.268
2004-2, 2004-2 I.R.B.269
2004-3, 2004-5 I.R.B.391
2004-4, 2004-2 I.R.B.273
2004-5, 2004-7 I.R.B.489
2004-6, 2004-3 I.R.B.308
2004-7, 2004-3 I.R.B.310
2004-8, 2004-4 I.R.B.333
2004-9, 2004-4 I.R.B.334
2004-10, 2004-6 I.R.B.433
2004-11, 2004-6 I.R.B.434
2004-12, 2004-10 I.R.B.556
2004-13, 2004-12 I.R.B.631
2004-14, 2004-9 I.R.B.526
2004-15, 2004-9 I.R.B.526
2004-16, 2004-9 I.R.B.527
2004-17, 2004-11 I.R.B.605
2004-18, 2004-11 I.R.B.605
2004-19, 2004-11 I.R.B.606
2004-20, 2004-11 I.R.B.608
2004-21, 2004-11 I.R.B.609
2004-22, 2004-12 I.R.B.632
2004-23, 2004-15 I.R.B.725
2004-24, 2004-13 I.R.B.642
2004-25, 2004-15 I.R.B.727
2004-26, 2004-16 I.R.B.782
2004-27, 2004-16 I.R.B.782
2004-28, 2004-16 I.R.B.783
2004-29, 2004-17 I.R.B.828
2004-30, 2004-17 I.R.B.828
2004-31, 2004-17 I.R.B.830
2004-32, 2004-18 I.R.B.847
2004-33, 2004-18 I.R.B.847
2004-34, 2004-18 I.R.B.848
2004-35, 2004-19 I.R.B.889
2004-36, 2004-19 I.R.B.889
2004-37, 2004-21 I.R.B.947
2004-38, 2004-21 I.R.B.949
2004-39, 2004-22 I.R.B.982
2004-40, 2004-23 I.R.B.1028
2004-42, 2004-25 I.R.B.1075
Proposed Regulations:
REG-106590-00, 2004-14 I.R.B.704
REG-116664-01, 2004-3 I.R.B.319
REG-129447-01, 2004-19 I.R.B.894
REG-106681-02, 2004-18 I.R.B.852
Proposed Regulations— Continued:
REG-122379-02, 2004-5 I.R.B.392
REG-139792-02, 2004-20 I.R.B.926
REG-139845-02, 2004-5 I.R.B.397
REG-140492-02, 2004-23 I.R.B.1031
REG-148399–02, 2004-24 I.R.B.1066
REG-165579-02, 2004-13 I.R.B.651
REG-166012-02, 2004-13 I.R.B.655
REG-115471-03, 2004-14 I.R.B.706
REG-116564-03, 2004-20 I.R.B.927
REG-121475-03, 2004-16 I.R.B.793
REG-126459-03, 2004-6 I.R.B.437
REG-126967-03, 2004-10 I.R.B.566
REG-128309-03, 2004-16 I.R.B.800
REG-128590-03, 2004-21 I.R.B.952
REG-149752-03, 2004-14 I.R.B.707
REG-153172-03, 2004-15 I.R.B.729
REG-156232-03, 2004-5 I.R.B.399
REG-156421-03, 2004-10 I.R.B.571
REG-167217-03, 2004-9 I.R.B.540
REG-167265-03, 2004-15 I.R.B.730
Revenue Procedures:
2004-1, 2004-1 I.R.B.1
2004-2, 2004-1 I.R.B.83
2004-3, 2004-1 I.R.B.114
2004-4, 2004-1 I.R.B.125
2004-5, 2004-1 I.R.B.167
2004-6, 2004-1 I.R.B.197
2004-7, 2004-1 I.R.B.237
2004-8, 2004-1 I.R.B.240
2004-9, 2004-2 I.R.B.275
2004-10, 2004-2 I.R.B.288
2004-11, 2004-3 I.R.B.311
2004-12, 2004-9 I.R.B.528
2004-13, 2004-4 I.R.B.335
2004-14, 2004-7 I.R.B.489
2004-15, 2004-7 I.R.B.490
2004-16, 2004-10 I.R.B.559
2004-17, 2004-10 I.R.B.562
2004-18, 2004-9 I.R.B.529
2004-19, 2004-10 I.R.B.563
2004-20, 2004-13 I.R.B.642
2004-21, 2004-14 I.R.B.702
2004-22, 2004-15 I.R.B.727
2004-23, 2004-16 I.R.B.785
2004-24, 2004-16 I.R.B.790
2004-25, 2004-16 I.R.B.791
2004-26, 2004-19 I.R.B.890
2004-27, 2004-17 I.R.B.831
2004-28, 2004-22 I.R.B.984
2004-29, 2004-20 I.R.B.918
2004-30, 2004-21 I.R.B.950
2004-31, 2004-22 I.R.B.986
2004-32, 2004-22 I.R.B.988
2004-33, 2004-22 I.R.B.989
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2003–27 through 2003–52 is in Internal Revenue Bulletin
2003–52, dated December 29, 2003.
June 28, 2004ii2004-26 I.R.B.

Revenue Procedures— Continued:
2004-34, 2004-22 I.R.B.991
2004-35, 2004-23 I.R.B.1029
2004-36, 2004-24 I.R.B.1063
2004-37, 2004-26 I.R.B.1099
Revenue Rulings:
2004-1, 2004-4 I.R.B.325
2004-2, 2004-2 I.R.B.265
2004-3, 2004-7 I.R.B.486
2004-4, 2004-6 I.R.B.414
2004-5, 2004-3 I.R.B.295
2004-6, 2004-4 I.R.B.328
2004-7, 2004-4 I.R.B.327
2004-8, 2004-10 I.R.B.544
2004-9, 2004-6 I.R.B.428
2004-10, 2004-7 I.R.B.484
2004-11, 2004-7 I.R.B.480
2004-12, 2004-7 I.R.B.478
2004-13, 2004-7 I.R.B.485
2004-14, 2004-8 I.R.B.511
2004-15, 2004-8 I.R.B.515
2004-16, 2004-8 I.R.B.503
2004-17, 2004-8 I.R.B.516
2004-18, 2004-8 I.R.B.509
2004-19, 2004-8 I.R.B.510
2004-20, 2004-10 I.R.B.546
2004-21, 2004-10 I.R.B.544
2004-22, 2004-10 I.R.B.553
2004-23, 2004-11 I.R.B.585
2004-24, 2004-10 I.R.B.550
2004-25, 2004-11 I.R.B.587
2004-26, 2004-11 I.R.B.598
2004-27, 2004-12 I.R.B.625
2004-28, 2004-12 I.R.B.624
2004-29, 2004-12 I.R.B.627
2004-30, 2004-12 I.R.B.622
2004-31, 2004-12 I.R.B.617
2004-32, 2004-12 I.R.B.621
2004-33, 2004-12 I.R.B.628
2004-34, 2004-12 I.R.B.619
2004-35, 2004-13 I.R.B.640
2004-36, 2004-12 I.R.B.620
2004-37, 2004-11 I.R.B.583
2004-38, 2004-15 I.R.B.717
2004-39, 2004-14 I.R.B.700
2004-40, 2004-15 I.R.B.716
2004-41, 2004-18 I.R.B.845
2004-42, 2004-17 I.R.B.824
2004-43, 2004-18 I.R.B.842
2004-44, 2004-19 I.R.B.885
2004-45, 2004-22 I.R.B.971
2004-46, 2004-20 I.R.B.915
2004-47, 2004-21 I.R.B.941
2004-48, 2004-21 I.R.B.945
2004-49, 2004-21 I.R.B.939
2004-50, 2004-22 I.R.B.977
2004-51, 2004-22 I.R.B.974
Revenue Rulings— Continued:
2004-52, 2004-22 I.R.B.973
2004-53, 2004-23 I.R.B.1026
2004-54, 2004-23 I.R.B.1024
2004-55, 2004-26 I.R.B.1081
2004-56, 2004-24 I.R.B.1055
2004-57, 2004-24 I.R.B.1048
2004-58, 2004-24 I.R.B.1043
2004-59, 2004-24 I.R.B.1050
2004-60, 2004-24 I.R.B.1051
2004-61, 2004-25 I.R.B.1073
2004-62, 2004-25 I.R.B.1072
Tax Conventions:
2004-3, 2004-7 I.R.B.486
2004-52, 2004-24 I.R.B.1071
Treasury Decisions:
9099, 2004-2 I.R.B.255
9100, 2004-3 I.R.B.297
9101, 2004-5 I.R.B.376
9102, 2004-5 I.R.B.366
9103, 2004-3 I.R.B.306
9104, 2004-6 I.R.B.406
9105, 2004-6 I.R.B.419
9106, 2004-5 I.R.B.384
9107, 2004-7 I.R.B.447
9108, 2004-6 I.R.B.429
9109, 2004-8 I.R.B.519
9110, 2004-8 I.R.B.504
9111, 2004-8 I.R.B.518
9112, 2004-9 I.R.B.523
9113, 2004-9 I.R.B.524
9114, 2004-11 I.R.B.589
9115, 2004-14 I.R.B.680
9116, 2004-14 I.R.B.674
9117, 2004-15 I.R.B.721
9118, 2004-15 I.R.B.718
9119, 2004-17 I.R.B.825
9120, 2004-19 I.R.B.881
9121, 2004-20 I.R.B.903
9122, 2004-19 I.R.B.886
9123, 2004-20 I.R.B.907
9124, 2004-20 I.R.B.901
9125, 2004-23 I.R.B.1012
9126, 2004-23 I.R.B.1023
9127, 2004-24 I.R.B.1042
9128, 2004-21 I.R.B.943
9129, 2004-24 I.R.B.1046
9130, 2004-26 I.R.B.1082
2004-26 I.R.B.iiiJune 28, 2004

Findings List of Current Actions on
Previously Published Items
1
Bulletins 2004–1 through 2004–26
Announcements:
93-60
Obsoleted by
Rev. Proc. 2004-23, 2004-16 I.R.B.785
2003-56
Modified by
Ann. 2004-11, 2004-10 I.R.B.581
2004-38
Modified by
Ann. 2004-43, 2004-21 I.R.B.955
2004-43
Corrected by
Ann. 2004-51, 2004-23 I.R.B.1041
Notices:
98-5
Withdrawn by
Notice 2004-19, 2004-11 I.R.B.606
2000-4
Obsoleted by
T.D. 9115, 2004-14 I.R.B.680
2002-31
Modified by
Rev. Rul. 2004-60, 2004-24 I.R.B.1051
2003-76
Modified by
Notice 2004-19, 2004-11 I.R.B.606
2004–2
Modified by
Notice 2004–25, 2004–15 I.R.B.727
Proposed Regulations:
REG-110896-98
Corrected by
Ann. 2004-14, 2004-10 I.R.B.582
REG-115037-00
Corrected by
Ann. 2004-7, 2004-4 I.R.B.365
REG-138499-02
Partially withdrawn by
REG-106590-00, 2004-14 I.R.B.704
REG-143321-02
Withdrawn by
REG-156232-03, 2004-5 I.R.B.399
REG-146893-02
Corrected by
Ann. 2004-7, 2004-4 I.R.B.365
Proposed Regulations— Continued:
REG-163974-02
Corrected by
Ann. 2004-13, 2004-9 I.R.B.543
REG-166012-02
Corrected by
Ann. 2004-40, 2004-17 I.R.B.840
Revenue Procedures:
71-21
Modified and superseded by
Rev. Proc. 2004-34, 2004-22 I.R.B.991
85-35
Obsoleted by
Rev. Proc. 2004-26, 2004-19 I.R.B.890
87-19
Obsoleted in part by
Rev. Proc. 2004-18, 2004-9 I.R.B.529
93-15
Obsoleted in part by
Rev. Proc. 2004-18, 2004-9 I.R.B.529
94-41
Superseded by
Rev. Proc. 2004-15, 2004-7 I.R.B.490
94-55
Obsoleted in part by
Rev. Proc. 2004-18, 2004-9 I.R.B.529
98-16
Suspended by
Notice 2004-12, 2004-10 I.R.B.556
2000-38
Modified by
Rev. Proc. 2004-11, 2004-3 I.R.B.311
2000-50
Modified by
Rev. Proc. 2004-11, 2004-3 I.R.B.311
2001-10
Modified by
Ann. 2004-16, 2004-13 I.R.B.668
2001-23
Modified by
Ann. 2004-16, 2004-13 I.R.B.668
2002-9
Modified and amplified by
Rev. Rul. 2004-18, 2004-8 I.R.B.509
Rev. Rul. 2004-62, 2004-25 I.R.B.1072
Rev. Proc. 2004-23, 2004-16 I.R.B.785
Rev. Proc. 2004-30, 2004-21 I.R.B.950
Rev. Proc. 2004-32, 2004-22 I.R.B.988
Rev. Proc. 2004-33, 2004-22 I.R.B.989
Rev. Proc. 2004-34, 2004-22 I.R.B.991
Rev. Proc. 2004-36, 2004-24 I.R.B.1063
Revenue Procedures— Continued:
Modified by
Rev. Proc. 2004-11, 2004-3 I.R.B.311
Ann. 2004-16, 2004-13 I.R.B.668
2002-28
Modified by
Ann. 2004-16, 2004-13 I.R.B.668
2002-71
Superseded by
Rev. Proc. 2004-13, 2004-4 I.R.B.335
2003-1
Superseded by
Rev. Proc. 2004-1, 2004-1 I.R.B.1
2003-2
Superseded by
Rev. Proc. 2004-2, 2004-1 I.R.B.83
2003-3
As amplified by Rev. Proc. 2003-14, and as
modified by Rev. Proc. 2003-48 superseded by
Rev. Proc. 2004-3, 2004-1 I.R.B.114
2003-4
Superseded by
Rev. Proc. 2004-4, 2004-1 I.R.B.125
2003-5
Superseded by
Rev. Proc. 2004-5, 2004-1 I.R.B.167
2003-6
Superseded by
Rev. Proc. 2004-6, 2004-1 I.R.B.197
2003-7
Superseded by
Rev. Proc. 2004-7, 2004-1 I.R.B.237
2003-8
Superseded by
Rev. Proc. 2004-8, 2004-1 I.R.B.240
2003-23
Modified and superseded by
Rev. Proc. 2004-14, 2004-7 I.R.B.489
2003-26
Supplemented by
Rev. Proc. 2004-17, 2004-10 I.R.B.562
2003-29
Obsoleted, except as provided in section 5.02, by
Rev. Proc. 2004-24, 2004-16 I.R.B.790
2003-64
Modified by
Rev. Proc. 2004-21, 2004-14 I.R.B.702
2004-1
Corrected by
Ann. 2004-8, 2004-6 I.R.B.441
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2003–27 through 2003–52 is in Internal Revenue Bulletin 2003–52, dated December 29,
2003.
June 28, 2004iv2004-26 I.R.B.

Revenue Procedures— Continued:
2004-4
Modified by
Rev. Proc. 2004-15, 2004-7 I.R.B.490
2004-5
Modified by
Rev. Proc. 2004-15, 2004-7 I.R.B.490
2004-6
Modified by
Rev. Proc. 2004-15, 2004-7 I.R.B.490
2004-7
Amplified by
Rev. Proc. 2004-37, 2004-26 I.R.B.1099
Revenue Rulings:
55-748
Modified and superseded by
Rev. Rul. 2004-20, 2004-10 I.R.B.546
92-19
Supplemented in part by
Rev. Rul. 2004-14, 2004-8 I.R.B.511
94-38
Clarified by
Rev. Rul. 2004-18, 2004-8 I.R.B.509
98-25
Clarified by
Rev. Rul. 2004-18, 2004-8 I.R.B.509
2004-38
Modified by
Rev. Proc. 2004-22, 2004-15 I.R.B.727
Treasury Decisions:
9088
Corrected by
Ann. 2004-39, 2004-17 I.R.B.840
2004-26 I.R.B.vJune 28, 2004

INDEX
Internal Revenue Bulletins
2004–1 through 2004–26
The abbreviation and number in parenthesis
following the index entry refer to the specific
item; numbers in roman and italic type follow-
ing the parentheses refer to the Internal Rev-
enue Bulletin in which the item may be found
and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction
Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural
Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
COBRA health care continuation cover-
age requirements (RR 22) 10,553
Coverage requirements, exclusions
(REG–149752–03) 14,707
Determination letters, issuing procedures
(RP 6) 1,197
Electronic delivery of payee statements
(Notice 10) 6,433
Employee Retirement Income Security
Act of 1974 (ERISA), participant,
working owner (CD 2078) 16,773
Forms 1099 and 5498 payee statements,
electronic delivery (Notice 10) 6,433
Full funding limitations, weighted aver-
age interest rate for:
January 2004 (Notice 3) 5,391
February 2004 (Notice 14) 9,526
March2004(Notice24)13,642
April 2004 (Notice 32) 18,847
May 2004 (Notice 40) 23,1028
June 2004 (Notice 42) 25,1075
Letter rulings:
And determination letters, areas which
will not be issued from:
Associates Chief Counsel and Divi-
sion Counsel (TE/GE) (RP 3) 1,
114
EMPLOYEE
PLANS—Cont.
Associate Chief Counsel (Interna-
tional) (RP 7) 1,237
And information letters, etc. (RP 4) 1,
125
And information letters issued by As-
sociate Offices, determination letters
issued by Operating Divisions (RP
1) 1,1; correction of user fee (Ann
8) 6,441
User fees, request for letter rulings (RP
8) 1,240
Minimum funding standards:
Current liability:
Alternative deficit reduction (Ann
38) 18,878
Election of alternative deficit reduc-
tion (Ann 43) 21,955; correction
(Ann 51) 23,1041
Interest rate (Notice 34) 18,848
Waivers (RP 15) 7,490
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
Proposed Regulations:
26 CFR 1.79–1, amended; 1.83–3,
amended; 1.402(a)–1, amended;
value of life insurance contracts
when distributed from a qualified
retirement plan (REG–126967–03)
10,566
26 CFR 1.410(b)–0, amended;
1.410(b)–6, revised; exclusion of
employees of 501(c)(3) organiza-
tions in 401(k) and 401(m) plans
(REG–149752–03) 14,707
26 CFR 1.411(d)–3, amended;
54.4980F–1(b), amended; sec-
tion 411(d)(6) protected benefits
(REG–128309–03) 16,800
Qualified retirement plans:
Determination letter program, future of
(Ann 32) 18,860
Employee stock ownership plans, syn-
thetic equity, listed transactions (RR
4) 6,414
Enforcement, union plans under sec-
tion 457 (Ann 52) 24,1071
Governmental plan under section 457
(RR 57) 24,1048
Master and prototype (M&P) plans,
volume submitter (VS) plans (Ann
33) 18,862
Minimum participation standards, spe-
cial rule (RR 11) 7,480
EMPLOYEE
PLANS—Cont.
Remedial amendment period (RP 25)
16,791
Required minimum distributions (TD
9130) 26,1082
Rollovers (RR 12) 7,478
Section 411(d)(6) protected benefits
(REG–128309–03) 16,800
Section 412(i) plans:
Deductibility, listed transactions
(RR 20) 10,546
Discrimination (RR 21) 10,544
Valuation (RP 16) 10,559
Top-heavy status, special rules (RR 13)
7,485
Vesting, consent (RR 10) 7,484
Regulations:
26 CFR 1.401(a)(9)–6, added;
1.401(a)(9)–6T,removed;
1.401(a)(9)–8, revised; required
distributions from retirement plans
(TD 9130) 26,1082
Roth IRAs, tax shelters (Notice 8) 4,333
S corporations, employee stock owner-
ship plans (ESOPs), termination of
election (RP 14) 7,489
Technical advice:
To directors and appeals area direc-
tors from Associates Chief Coun-
sel and Division Counsel/Associate
Chief Counsel (TE/GE) (RP 2) 1,83
To IRS employees (RP 5) 1,167
Valuation of distributed life insurance
contracts (REG–126967–03) 10,566
EMPLOYMENT TAX
Collection of Limited Liability Com-
pany’s (LLC’s) employment tax liabil-
ities (RR 41) 18,845
Delinquent tax, levy on wages, salary,
and other income, exempt amount ta-
bles (Notice 4) 2,273
Form W-2, new reporting code for Box
12, 2004 (Ann 2) 3,322
Income and employment tax treatment of
benefits received under the Smallpox
Emergency Personnel Protection Act of
2003 (SEPPA) (Notice 17) 11,605
Mileage allowance, local transporta-
tion expenses computed similarly to a
courier’s compensation, accountable
plan (RR 1) 4,325
June 28, 2004vi2004-26 I.R.B.

EMPLOYMENT
TAX—Cont.
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
Proposed Regulations:
26 CFR 31.3121(b)(2)–1, amended;
31.3121(b)(10)–2,amended;
31.3306(c)(10)–2, revised; student
FICA exception (REG–156421–03)
10,571
Reduction of the stated principal amount
of a recourse note issued by the em-
ployee to the employer to acquire em-
ployer stock, treatment (RR 37) 11,583
Student FICA exception under Code sec-
tion 3121(b)(10):
And section 3306(c)(10)(B), applica-
tion (REG–156421–03) 10,571
Proposed safe harbor available for cer-
tain institutions (Notice 12) 10,556
Wages, options and nonqualified deferred
compensation transferred pursuant to
divorce (RR 60) 24,1051
ESTATE TAX
Gross estate, election to value on alter-
nate valuation date (REG–139845–02)
5,397
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
Proposed Regulations:
26 CFR 20.2032–1(b), revised;
301.9100–6T, amended; gross es-
tate, election to value on alternate
valuation date (REG–139845–02) 5,
397
Regulations:
26 CFR 20.2056(b), amended;
20.2056A–5, amended; 20.2056A–
13, revised; definition of income for
trust purposes (TD 9102) 5,366
Trusts, definition of income, total return,
adjustments to income (TD 9102) 5,
366
EXCISE TAX
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
EXCISE TAX—Cont.
Private foundations:
Determination of net investment in-
come from distributions from trusts
and estates (Notice 35) 19,889
Split-interest trust distributions, dis-
tributable amount (Notice 36) 19,
889
EXEMPT
ORGANIZATIONS
Declaratory judgmentsuits, annual notice
to doners regarding pending and settled
suits (Ann 1) 1,254
Electronic delivery of payee statements
(Notice 10) 6,433
Forms 1099 and 5498 payee statements,
electronic delivery (Notice 10) 6,433
Joint ventures with for-profit corporations
(RR 51) 22,974
Letter rulings:
And determination letters, areas which
will not be issued from Associates
Chief Counsel and Division Counsel
(TE/GE) (RP 3) 1,114
And information letters, etc. (RP 4) 1,
125
And information letters issued by As-
sociate Offices, determination letters
issued by Operating Divisions (RP
1) 1,1; correction of user fee (Ann
8) 6,441
User fees, request for letter rulings (RP
8) 1,240
List of organizations classified as private
foundations (Ann 12) 9,541;(Ann15)
11,612;(Ann17)12,635; (Ann 19) 13,
668;(Ann22)14,709; (Ann 25) 15,
737;(Ann28)16,818; (Ann 30) 17,
833;(Ann31)18,854; (Ann 34) 19,
895;(Ann36)20,932; (Ann 45) 21,
958;(Ann50)22,1005; (Ann 53) 26,
1105
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
Private foundations:
Determination of net investment in-
come from distributions from trusts
and estates (Notice 35) 19,889
Split-interest trust distributions, dis-
tributable amount (Notice 36) 19,
889
EXEMPT
ORGANIZATIONS—Cont.
Public advocacy activities conducted by
certain tax-exempt organizations (RR
6) 4,328
Revocations (Ann 18) 12,639; (Ann 23)
13,673; (Ann 27) 14,714; (Ann 37) 17,
839; (Ann 41) 18,879
Technical advice:
To directors and appeals area direc-
tors from Associates Chief Coun-
sel and Division Counsel/Associate
Chief Counsel (TE/GE) (RP 2) 1,83
To IRS employees (RP 5) 1,167
GIFT TAX
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
Regulations:
26 CFR 25.2523(e)–1, amended;
25.2523(h)–2, amended; 26.2601–1,
amended; definition of income for
trust purposes (TD 9102) 5,366
Trusts, definition of income, total return,
adjustments to income (TD 9102) 5,
366
INCOME TAX
Abusive foreign tax credit transactions:
Taxpayer alert (Notice 20) 11,608
Withdrawal of Notice 98–5 (Notice 19)
11,606
Advance payments, year of inclusion (RP
34) 22,991; (Ann 48) 22,998
Advance Pricing Agreement (APA) pro-
gram for 2003 (Ann 26) 15,743
Agent for certain purposes, definition (TD
9111) 8,518
Allocation and apportionment of in-
terest expense (TD 9120) 19,881;
(REG–129447–01) 19,894
Allocation of basis under section 358
(REG–116564–03) 20,927
At-risk limitations, interest other than that
of creditor (TD 9124) 20,901
Automobile owners and lessees, inflation
adjustment for 2004 (RP 20) 13,642
Capital gain dividends of RICs and
REITS, applying section 1(h) of the
Code (Notice 39) 22,982
2004-26 I.R.B.viiJune 28, 2004

INCOME TAX—Cont.
Capitalization:
Of amounts paid to acquire or create
intangibles (TD 9107) 7,447
Tangible property (Notice 6) 3,308
Capitalized costs, treatment of capitalized
business acquisition costs (Notice 18)
11,605
Charitable contributions, intellectual
property (Notice 7) 3,310
Charitable remainder trust, application
of ordering rule, cancellation of public
hearing on REG–110896–98 (Ann 14)
10,582
Check the box, disregarded entities
(REG–106681–02) 18,852
Circular 230, application to municipal
bond options (Ann 29) 15,772
Compensation for injuries or sickness,
amounts received under accident and
health plans (RR 55) 26,1081
Confidential transactions (TD 9108) 6,
429
Consolidated groups:
Circular basis adjustments (TD 9117)
15,721; (REG–167265–03) 15,730
Loss limitation rules (TD 9118) 15,
718; correction (Ann 47) 21,966;
(REG–153172–03) 15,729
Consolidated returns:
Affiliation, value requirement (Notice
37) 21,947
Rules for the disallowance of interest
expense deductions under section
265(a)(2) (REG–128590–03) 21,
952
Contingent nonperiodic payments made
pursuant to notional principal contracts
(REG–166012–02) 13,655; correction
(Ann 40) 17,840
Corporations:
Determination of stock basis after a
group structure change (TD 9122)
19,886
S corporations:
Eligible shareholder, Indian tribal
government (RR 50) 22,977
Relief for late shareholders (RP 35)
23,1029
Tax shelter, listed transaction (No-
tice 30) 17,828
Spin-offs, corporate distributions (RR
23) 11,585
Structures to avoid limitations on in-
terest deductions using partnerships
and guaranteed payments, listed
transactions (Notice 31) 17,830
INCOME TAX—Cont.
Transfers of assets or stock following
a reorganization (REG–165579–02)
13,651
Cost depletion for an oil and gas property,
determining total recoverable units to
compute (RP 19) 10,563
Costs attributable to stock options in qual-
ified cost sharing arrangements, correc-
tion to TD 9088 (Ann 39) 17,840
Creative property costs, safe harbor amor-
tization (RP 36) 24,1063
Credit card annual fees, treatment by is-
suers (RR 52) 22,973
Credits:
Health coverage tax credit, qualified
health insurance (RP 12) 9,528
Increasing research activities credit:
Internal-use software, advance no-
tice of proposed rulemaking –
REG–153656–03 (Ann 9) 6,441
Qualified research definition (TD
9104) 6,406
Research credit recordkeeping
agreements, pilot program (No-
tice 11) 6,434
Low-income housing credit:
2004 population figures used for
calculation (Notice 21) 11,609
Satisfactory bond, “bond factor”
amounts for the period:
January through March 2004
(RR 16) 8,503
April through June 2004 (RR 40)
15,716
State or local housing tax credit (TD
9110) 8,504
New markets tax credit (TD 9116) 14,
674; (REG–115471–03) 14,706
Nonconventional source fuel credit:
Accounting (RP 27) 17,831;(Ann
42) 17,840
Inflation adjustment factor, refer-
ence price for CY 2003 (Notice
33) 18,847
Renewable electricity production
credit, 2004 inflation adjustment
(Notice 29) 17,828
Credits or refunds of tax under section
692(c), procedures for claiming (RP 26)
19,890
Declaratory judgmentsuits, annual notice
to doners regarding pending and settled
suits (Ann 1) 1,254
Deduction of business expenses, use of
statistical sampling to determine excep-
INCOME TAX—Cont.
tions from disallowance (RP 29) 20,
918
Depreciation of MACRS property that is
acquired in a like-kind exchange or as a
result of an involuntary conversion (TD
9115) 14,680; (REG–106590–00) 14,
704
Discharge of indebtedness under section
108, reduction of tax attributes (TD
9127) 24,1042
Disciplinary actions involving attorneys,
certified public accountants, enrolled
agents, and enrolled actuaries (Ann 6)
3,322; (Ann 49) 21,966
Disclosure of relative values of optional
forms of benefit (TD 9099) 2,255
Disclosures of returns and return informa-
tion to government employees (RR 53)
23,1026
Electronic filing of:
Certain income tax returns and
other forms (TD 9100) 3,297;
(REG–116664–01) 3,319
Duplicate Forms 5472 (TD 9113) 9,
524; (REG–167217–03) 9,540
Form 8609 (TD 9112) 9,523
Electronic payee statements (TD 9114)
11,589
Enrolled agents, renewal of enrollment
(Ann 35) 17,839
Environmental remediation expenses:
Restoration of amount held under
claim of right (RR 17) 8,516
Uniform capitalization of costs (RR
18) 8,509
Forest Land Enhancement Program
(FLEP), cost-share payments (RR 8)
10,544
Forms:
3115, Application for Change in Ac-
counting Method, revised (Ann 16)
13,668
5472, electronic filing of du-
plicates (TD 9113) 9,524;
(REG–167217–03) 9,540
8609, Low-Income Housing Credit Al-
location Certification, electronic fil-
ing (TD 9112) 9,523
8806, Information Return for Ac-
quisition of Control or Substantial
Change in Capital Structure, new
(Ann 5) 4,362
8858, Information Return of U.S.
Persons With Respect to Foreign
Disregarded Entities, comments re-
quested(Ann4)4,357
June 28, 2004viii2004-26 I.R.B.

INCOME TAX—Cont.
Frivolous tax returns:
Attempting to avoid taxes under sec-
tion 861 (RR 30) 12,622
Common tax avoidance schemes, civil
and criminal penalties (Notice 22)
12,632
Excluding gross income under section
911 (RR 28) 12,624
Filing a “zero return” (RR 34) 12,619
Meritless “claim of right” arguments
(RR 29) 12,627
Meritless “corporation sole” argument
(RR 27) 12,625
Meritless home-based business deduc-
tions (RR 32) 12,621
Meritless “removal arguments” (RR
31) 12,617
Reparations tax credit (RR 33) 12,628
Guidance Priority List, recommendations
for 2004–2005 (Notice 26) 16,782
Health Savings Accounts (HSAs):
Eligible individual (RR 38) 15,717
Interaction between HSAs and other
health arrangements (RR 45) 22,971
Questions and answers (Notice 2) 2,
269
Safe harbor for preventive care ben-
efits provided by a high deductible
health plan (HDHP) (Notice 23) 15,
725
Transition relief for calendar year
2004, HSA established before April
15, 2005 (Notice 25) 15,727
Transition relief for determining an el-
igible individual (RP 22) 15,727
Income and employment tax treatment of
benefits received under the Smallpox
Emergency Personnel Protection Act of
2003 (SEPPA) (Notice 17) 11,605
Individual income tax returns, common
taxpayer mistakes (Notice 13) 12,631
Individual Taxpayer Identification Num-
bers (ITINs), new application process
(Notice 1) 2,268
Information reporting:
Extension of certain 2004 deadlines
(Notice 9) 4,334
For payments in lieu of dividends (TD
9103) 3,306
Health plans (Notice 16) 9,527
Royalties, payments made by a pub-
lisher to a literary agent on behalf of
an author (RR 46) 20,915
Innocent spouse relief, Publication 971,
revised (Ann 24) 14,714
INCOME TAX—Cont.
Insurance companies:
Distributions from non-qualified annu-
ity, section 72(q)(2) (Notice 15) 9,
526
Diversification requirements for
variable annuity, endowment,
and life insurance contracts
(REG–163974–02), hearing (Ann
13) 9,543
Loss payment patterns and discount
factors for the 2003 accident year
(RP 9) 2,275
Salvage discount factors for the 2003
accident year (RP 10) 2,288
Interest:
Deduction for education loan interest
(TD 9125) 23,1012
Investment:
Federal short-term, mid-term, and
long-term rates for:
January 2004 (RR 2) 2,265
February 2004 (RR 9) 6,428
March2004(RR25)11,587
April 2004 (RR 39) 14,700
May 2004 (RR 44) 19,885
June 2004 (RR 54) 23,1024
Rate tables (RR 14) 8,511
Rates:
Underpayments and overpayments,
quarter beginning:
April 1, 2004 (RR 26) 11,598
July 1, 2004 (RR 56) 24,1055
Reporting interest payments on quali-
fied education loans (TD 9125) 23,
1012
Inventory:
LIFO, price indexes used by depart-
ment stores for:
November 2003 (RR 7) 4,327
December 2003 (RR 19) 8,510
January 2004 (RR 35) 13,640
February 2004 (RR 42) 17,824
March 2004 (RR 48) 21,945
April 2004 (RR 61) 25,1073
Letter rulings:
And determination letters, areas which
will not be issued from:
Associates Chief Counsel and Divi-
sion Counsel (TE/GE) (RP 3) 1,
114
Associate Chief Counsel (Interna-
tional) (RP 7) 1,237
And information letters issued by As-
sociate Offices, determination letters
issued by Operating Divisions (RP
INCOME TAX—Cont.
1) 1,1; correction of user fee (Ann
8) 6,441
Liabilities, contested (RP 31) 22,986
Losses, abandonment or worthlessness,
creative property (RR 58) 24,1043
Meal and entertainment expenses, use
of statistical sampling to determine
amount excepted from deduction disal-
lowance (RP 29) 20,918
Methods of accounting:
Automatic consent for change in
method (RP 23) 16,785
Changes in determining depreciation
or amortization (RP 11) 3,311;(TD
9105) 6,419; (REG–126459–03) 6,
437
Credit cards:
Annual fees (RP 32) 22,988
Late fees (RP 33) 22,989
REMIC residual interests, inducement
fees (TD 9128) 21,943; (RP 30) 21,
950
Transfers to satisfy contested liabilities
(RP 31) 22,986
Mortgage bonds and credit certificates,
median income figures—2004 (RP 24)
16,790
Multi-party financing arrangements, use
of related persons or pass-through enti-
ties to avoid the application of sections
265(a)(2) and 246A (Ann 44) 21,957
Obligations of state and local govern-
ments, solid waste disposal facilities
(REG–140492–02) 23,1031
Partnerships:
Allocation of foreign tax expen-
ditures (TD 9121) 20,903;
(REG–139792–02) 20,926
Amortization of goodwill and certain
other intangibles (RR 49) 21,939
Assets-over partnership mergers, sec-
tions 704(c)(1)(B) and 737 conse-
quences (RR 43) 18,842
Capital account adjustments in con-
nection with the granting of an inter-
est in the partnership as considera-
tion for services (TD 9126) 23,1023
Charitable contributions, trust govern-
ing instrument requirement (RR 5) 3,
295
Conversion to state law corporation
(RR 59) 24,1050
Electing large partnerships, separately
stated items, qualified dividend in-
come (Notice 5) 7,489
2004-26 I.R.B.ixJune 28, 2004

INCOME TAX—Cont.
Tax assessment, statute of limitations
(CD 2079) 22,978
Penalties, defenses available to the im-
position of the accuracy-related penalty
(TD 9109) 8,519
Pension distributions, guidance on source
of cross-border payment (RP 37) 26,
1099
Per diem rates, Publication 1542, revision
changes (Ann 20) 13,673
Practice before the Internal Revenue Ser-
vice (REG–122379–02) 5,392
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
Private foundations, organizations now
classified as (Ann 12) 9,541; (Ann 15)
11,612; (Ann 17) 12,635; (Ann 19)
13,668; (Ann 22) 14,709; (Ann 25)
15,737; (Ann 28) 16,818; (Ann 30)
17,833; (Ann 31) 18,854; (Ann 34)
19,895; (Ann 36) 20,932; (Ann 45)
21,958; (Ann 50) 22,1005; (Ann 53)
26,1105
Proposed Regulations:
26 CFR 1.45D–1, amended; new mar-
kets tax credit (REG–115471–03)
14,706
26 CFR 1.142(a)(6)–1, added; defini-
tion of solid waste disposal facili-
ties for tax-exempt bond purposes
(REG–140492–02) 23,1031
26 CFR 1.162–30, added; 1.212–1(q),
added;1.446–3,amended;
1.1234A–1, added; notional prin-
cipal contracts, contingent nonperi-
odic payments (REG–166012–02)
13,655; correction (Ann 40) 17,840
26 CFR 1.167(e)–1, amended;
1.446–1, amended; 1.1016–3,
amended; changes in computing
depreciation (REG–126459–03) 6,
437
26 CFR 1.168(a)–1, added;
1.168(b)–1, added; 1.168(d)–1,
amended; 1.168(i)–0, –1, amended;
1.168(i)–5, –6, added; 1.168(k)–1,
added; depreciation of MACRS
property that is acquired in a
like-kind exchange or as a re-
sult of an involuntary conversion
(REG–106590–00) 14,704
26 CFR 1.170A–11, amended;
1.556–2, amended; 1.565–1,
amended; 1.936–7, amended;
1.1017–1, amended; 1.1368–1,
INCOME TAX—Cont.
amended; 1.1377–1, amended;
1.1502–21,–75,amended;
1.1503–2, amended; 1.6038B–1,
amended; 301.7701–3, amended;
guidance necessary to facili-
tate business electronic filing
(REG–116664–01) 3,319
26 CFR 1.263A–9, revised;
1.263A–15, amended; uniform cap-
italization of interest expense in safe
harbor sale and leaseback transac-
tions (REG–148399–02) 24,1066
26 CFR 1.265–2, amended;
1.1502–13, amended; special con-
solidated return rules for the dis-
allowance of interest expense de-
ductions under section 265(a)(2)
(REG–128590–03) 21,952
26 CFR 1.337(d)–2(c)(2), added;
1.1502–35(f)(1), added; 1.1502–
80(c), revised; loss limitation rules
(REG–153172–03) 15,729
26 CFR 1.358–1, –2, amended; alloca-
tion of basis (REG–116564–03) 20,
927
26 CFR 1.368–1, –2, amended; corpo-
rate reorganizations, transfers of as-
sets or stock following a reorganiza-
tion (REG–165579–02) 13,651
26 CFR 1.482–6, –9, amended; treat-
ment of services under section 482,
allocation of income and deductions
from intangibles (REG–115037–00,
REG–146893–02); correction (Ann
7) 4,365
26 CFR 1.704–1, amended; partner’s
distributive share: foreign tax ex-
penditures (REG–139792–02) 20,
926
26 CFR 1.856–9, added; 1.1361–4,
amended; 301.7701–2, amended;
modification of check the box
(REG–106681–02) 18,852
26 CFR 1.861–9, amended; alloca-
tion and apportionment of interest
expense; alternative method for de-
termining tax book value of assets
(REG–129447–01) 19,894
26 CFR 1.1397E–1, amended; qual-
ified zone academy bonds, obliga-
tions of states and political subdivi-
sions (REG–121475–03) 16,793
26 CFR 1.1502–11, –13, revised;
1.1502–28, amended; 1.1502–80,
revised; computation of taxable in-
come when section 108 applies to
INCOME TAX—Cont.
a member of a consolidated group
(REG–167265–03) 15,730
26 CFR 1.6038A–1, –2, amended;
electronic filing of duplicate Forms
5472 (REG–167217–03) 9,540
26 CFR 1.6043–4, added; 1.6045–3,
added; information reporting re-
lating to taxable stock transactions
(REG–156232–03) 5,399
31 CFR 10.33, revised; 10.35, added;
10.36, added; 10.37, added; reg-
ulations governing practice be-
fore the Internal Revenue Service
(REG–122379–02) 5,392
Publications:
538, Accounting Periods and Methods,
revised (Ann 21) 13,673
971, Innocent Spouse Relief (And Sep-
aration of Liability and Equitable
Relief), revised (Ann 24) 14,714
1220, Specifications for Filing Forms
1098, 1099, 5498 and W-2G Elec-
tronically or Magnetically, changes
affecting tax year2003 filing of in-
formation returns (Ann 3) 2,294
1542, Per Diem Rates (For Travel
Within the Continental United
States), revision changes (Ann 20)
13,673
Qualified amended return, modification
of the definition (Notice 38) 21,949
Qualified dividends, changes to rules
(Ann 11) 10,581
Qualified mortgage bonds and mortgage
credit certificates, average area and na-
tionwide housing purchase prices (RP
18) 9,529
Qualified offer regulations, award of at-
torney’s fees and other costs (TD 9106)
5,384
Qualified zone academy bonds, obliga-
tions of states and political subdivisions
(REG–121475–03) 16,793
Real estate investment trust (REIT) park-
ing income (RR 24) 10,550
Reduction of the stated principal amount
of a recourse note issued by the em-
ployee to the employer to acquire em-
ployer stock, treatment (RR 37) 11,583
Regulated investment companies (RICs),
repos (RP 28) 22,984
Regulations:
26 CFR 1.41–0, –4, amended;
602.101, amended; credit for in-
creasing research activities (TD
9104) 6,406
June 28, 2004x2004-26 I.R.B.

INCOME TAX—Cont.
26 CFR 1.42–1, added; 1.42–1T,
amended; low-income housing
credit allocation certification, elec-
tronic filing (TD 9112) 9,523
26 CFR 1.42–6, –8, –12, –14,
amended; section 42 carryover
and stacking rule amendments (TD
9110) 8,504
26 CFR 1.45D–1T, amended; new
markets tax credit (TD 9116) 14,
674
26 CFR 1.108–7T, redesignated as
1.108–7 and amended; 1.1017–1,
amended; 1.1017–1T(b)(4), re-
moved; reduction of tax attributes
due to discharge of indebtedness
(TD 9127) 24,1042
26 CFR 1.167(a)–3, amended;
1.263(a)–0, –4, –5, added; 1.446–5,
added; 602.101, amended; guidance
regarding deduction and capitaliza-
tion of expenditures (TD 9107) 7,
447
26 CFR 1.167(e)–1, amended;
1.167(e)–1T, added; 1.446–1,
amended;1.446–1T, added;
1.1016–3, amended; 1.1016–3T,
added; changes in computing depre-
ciation (TD 9105) 6,419
26 CFR 1.168(a)–1T, added;
1.168(b)–1T, added; 1.168(d)–1,
–1T, amended; 1.168(i)–0, –1,
amended; 1.168(i)–0T, –1T, –5T,
–6T, added; 1.168(k)–1T, amended;
depreciation of MACRS property
that is acquired in a like-kind ex-
change or as a result of an involun-
tary conversion (TD 9115) 14,680
26 CFR 1.170A–11, amended;
1.170A–11T, added; 1.556–2,
amended;1.556–2T, added;
1.565–1, amended; 1.565–1T,
added;1.936–7,amended;
1.936–7T, added;1.1017–1,
–1T, amended;1.1368–1,
amended; 1.1368–1T, added;
1.1377–1, amended; 1.1377–1T,
added;1.1502–21,–21T,
–75, amended;1.1502–75T,
added;1.1503–2, amended;
1.1503–2T, added; 1.6038B–1, –1T,
amended; 301.7701–3, amended;
301.7701–3T, added; 602.101,
amended; guidance necessary to
facilitate business electronic filing
(TD 9100) 3,297
INCOME TAX—Cont.
26 CFR 1.221–1, –2, added;
1.6050S–3, amended; deduction
for interest on qualified education
loans (TD 9125) 23,1012
26 CFR 1.263A–9, amended;
1.263A–9T, –15T, added; uniform
capitalization of interest expense in
safe harbor sale and leaseback trans-
actions (TD 9129) 24,1046
26 CFR 1.337(d)–2T, amended;
1.1502–35T, –80,amended;
1.1502–80T, added; loss limitation
rules (TD 9118) 15,718; correction
(Ann 47) 21,966
26 CFR 1.401(a)–11, –(20), revised;
1.417(a)(3)–1, added; 1.417(e)–1,
amended; 602.101, amended; dis-
closure of relative values of optional
forms of benefit (TD 9099) 2,255
26 CFR 1.446–6, added; 1.860A–0,
amended; 1.860C–1, amended;
1.863–0, –1, amended; REMICs;
application of section 446 with re-
spect to inducement fees (TD 9128)
21,943
26 CFR 1.465–8, –20, added; at-risk
limitations; interest other than that of
a creditor (TD 9124) 20,901
26 CFR 1.482–7, amended; compen-
satory stock options under section
482, TD 9088; correction (Ann 39)
17,840
26 CFR 1.642(c)–2, amended;
1.642(c)–5, revised; 1.643, revised;
1.651(a)–2(d), added; 1.661(a)–2(f),
revised; 1.664–3, amended; defini-
tion of income for trust purposes
(TD 9102) 5,366
26 CFR 1.704–1, amended; 1.704–1T,
added; partner’s distributive share:
foreign tax expenditures (TD 9121)
20,903
26 CFR 1.704–1, amended; section
704(b) and capital account revalua-
tions (TD 9126) 23,1023
26 CFR 1.861–9, –9T, amended; allo-
cation and apportionment of interest
expense; alternative method for de-
termining tax book value of assets
(TD 9120) 19,881
26 CFR 1.1291–0, –1, amended;
1.1295–0, –1, amended; 1.1296–1,
added; 1.1296(e)–1 redesignated as
1.1296–2 and revised; 1.6031(a)–1,
amended; electing mark to market
INCOME TAX—Cont.
for marketable stock (TD 9123) 20,
907
26 CFR 1.1502–13, revised;
1.1502–13T, added; 1.1502–28T,
amended; application of section 108
to members of a consolidated group
(TD 9117) 15,721
26 CFR 1.1502–31, amended; stock
basis after a group structure change
(TD 9122) 19,886
26 CFR 1.1502–35T, amended; sus-
pension of losses on certain stock
dispositions (TD 9048); correction
(Ann 10) 7,501
26 CFR 1.6011–4, amended;
301.6112–1, amended; confiden-
tial transactions (TD 9108) 6,429
26 CFR 1.6038A–2, amended;
1.6038–2T, added; electronic fil-
ing of duplicate Forms 5472 (TD
9113) 9,524
26 CFR 1.6041–2(a)(5), added;
1.6041–2T, removed; 1.6050S–2,
–4,added;1.6050S–2T,
–4T, removed;31.6051–1(j),
added; 31.6051–1T, removed;
301.6724–1T, removed; 602.101(b),
amended; electronic payee state-
ments (TD 9114) 11,589
26 CFR 1.6043–4T, revised;
1.6045–3T, revised; information
reporting relating to taxable stock
transactions (TD 9101) 5,376
26 CFR 1.6045–2, amended; informa-
tion statements forcertain substitute
payments (TD 9103) 3,306
26 CFR 1.6107–2, added; 1.6107–2T,
removed; 1.6695–1, amended;
1.6695–1T, removed; tax return pre-
parers, electronic filing (TD 9119)
17,825
26 CFR 1.6662–0, –2, –3, –4,
amended; 1.6664–0, –1, –4,
amended; establishing defenses to
the imposition of the accuracy-re-
lated penalty (TD 9109) 8,519
26 CFR 301.6103(1)–1, added;
301.6103(m)–1, added; definition
of agent for certain purposes (TD
9111) 8,518
26 CFR 301.7430–7, added;
301.7430–7T, removed; awards of
attorney’s fees and other costs based
upon qualified offers (TD 9106) 5,
384
2004-26 I.R.B.xiJune 28, 2004

INCOME TAX—Cont.
Reporting an acquisition of control or sub-
stantial change in capital structure, new
Form8806(Ann5)4,362
Revocations, exempt organizations (Ann
18) 12,639; (Ann 23) 13,673; (Ann 27)
14,714; (Ann 37) 17,839; (Ann 41) 18,
879
Section 911(d)(4) waiver, 2003 update
(RP 17) 10,562
Son of Boss transactions, settlement ini-
tiative (Ann 46) 21,964
Standard Industry Fare Level (SIFL) for-
mula (RR 36) 12,620
Stocks:
Constructive sale, short sale, and trans-
fers by broker (RR 15) 8,515
Electing mark to market for mar-
ketable stock (TD 9123) 20,907
Guidance under section 1502, suspen-
sion of losses on certain stock dispo-
sitions (TD 9048); correction (Ann
10) 7,501
Information reporting relating to tax-
able stock transactions (TD 9101) 5,
376; (REG–156232–03) 5,399
Losses, decrease in stock value (Notice
27) 16,782
Treatment of income on spread on
statutory and nonstatutory stock op-
tions upon exercise (Notice 28) 16,
783
Tax conventions:
Taxation of nonresident partners in a
service partnership that conducts ac-
tivities in the United States (RR 3) 7,
486
U.S.–Japan income tax treaty, tax rate
tables (Ann 54) 24,1061
Tax-exempt income, expenses and inter-
est, application of section 265(a)(2) to
related-party transactions in affiliated
groups (RR 47) 21,941
Tax return preparers, electronic filing (TD
9119) 17,825
Technical advice to directors and appeals
area directors from Associates Chief
Counsel and Division Counsel/Asso-
ciate Chief Counsel (TE/GE) (RP 2) 1,
83
Timber fertilization, business expenses
(RR 62) 25,1072
Treatment of services under section 482
(REG–115037–00, REG–146893–02);
correction (Ann 7) 4,365
INCOME TAX—Cont.
Trusts, definition of income, total return,
adjustments to income (TD 9102) 5,
366
Uniform capitalization of interest ex-
pense, safe harbor sale and lease-
back transactions (TD 9129) 24,1046;
(REG–148399–02) 24,1066
Withholding foreign partnership (WP)
and withholding foreign trust (WT)
agreements (RP 21) 14,702
SELF-EMPLOYMENT
TAX
Presidentially-declared disaster or combat
zone, postponement of certain acts (RP
13) 4,335
June 28, 2004xii2004-26 I.R.B.
*U.S. Government Printing Office: 2004—304–778/60141