[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.404(a)-2]

[Page 431-435]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.404(a)-2  Information to be furnished by employer claiming 
deductions; taxable years ending before December 31, 1971.

    (a) For the first taxable year for which a deduction from gross 
income is claimed under section 404(a) (1), (2), (3), or (7), the 
employer must file the following information (unless such information 
has been previously filed in accordance with the regulations under 
section 23(p) of the Internal Revenue Code of 1939) for each plan 
involved to establish that it meets the requirements of section 401(a) 
or 404(a)(2), and that deductions claimed do not exceed the amount 
allowable under paragraphs (1), (2), (3), and (7) of section 404(a), as 
the case may be:
    (1) Verified copies of all the instruments constituting or 
evidencing the plan, including trust indentures, group annuity 
contracts, specimen copy of each type of individual contract, and 
specimen copy of formal announcement and comprehensive detailed 
description to employees, with all amendments to any such instruments.
    (2) A statement describing the plan which identifies it and which 
sets forth the name or names of the employers, the effective date of the 
plan and of any amendments thereto, the method of distribution or of 
disbursing benefits (whether by trustee, insurance company, or 
otherwise), the dates when the instruments or amendments were executed, 
the date of formal announcement and the dates when comprehensive 
detailed description of the plan

[[Page 432]]

and of each amendment thereto were made available to employees 
generally, the dates when the plan and when the trust or the contract 
evidencing the plan and of any amendments thereto were put into effect 
so that contributions thereunder were irrevocable and a summary of the 
provisions and rules relating to--
    (i) Employee eligibility requirements for participation in the plan,
    (ii) Employee contributions,
    (iii) Employer contributions,
    (iv) The basis or formula for determining the amount of each type of 
benefit and the requirements for obtaining such benefits and the vesting 
conditions,
    (v) The medium of funding (e. g., self-insured, unit purchase group 
annuity contract, individual level annual premium retirement endowment 
insurance contracts, etc.) and, if not wholly insured, the medium of 
contributions and the kind of investments, and
    (vi) The discontinuance or modification of the plan and 
distributions or benefit payments upon liquidation or termination.
    (3) A tabulation in columnar form showing the information specified 
below with respect to each of the 25 highest paid employees covered by 
the plan in the taxable year, listed in order of their nondeferred 
compensation (where there are several plans of deferred compensation, 
the information for each of the plans may be shown on a single 
tabulation without repetition of the information common to the several 
plans):
    (i) Name.
    (ii) Whether an officer.
    (iii) Percentage of each class of stock owned directly or indirectly 
by the employee or members of his family.
    (iv) Whether the principal duties consist in supervising the work of 
other employees.
    (v) Year of birth.
    (vi) Length of service for employer to the close of the year.
    (vii) Total nondeferred compensation paid or accrued during the 
taxable year with a breakdown of such compensation into the following 
components:
    (A) Basic compensation and overtime pay,
    (B) Other direct payments, such as bonuses and commissions,
    (C) Compensation paid other than in cash, such as goods, services, 
insurance not directly related to the benefits or provided from funds 
under the plan, etc.
    (viii) Amount allocated during the year for the benefit of the 
employee or his beneficiary (including any insurance provided thereby or 
directly related thereto), less the employee's contributions during the 
year, under each other plan of deferred compensation.
    (ix) Amount allocated during the year for the benefit of the 
employee or his beneficiary (including any insurance provided thereby or 
directly related thereto), less the employee's contributions during the 
year, under the plan. If a profit-sharing or stock bonus plan, also a 
breakdown of such amounts into the following components:
    (A) Amounts originally allocated in the year, and
    (B) Amounts reallocated in the year.
    (x) Amounts of employee contributions during the year under the 
plan,
    (xi) If a pension or annuity plan,
    (A) The retirement age and date and the form of the retirement 
benefit,
    (B) The annual rate or amount of the retirement benefit, and
    (C) The aggregate of all of the employee's contributions under the 
plan,

all based, in the case of an employee who is not on retirement benefit 
under the plan, upon the assumption of his continued employment at his 
current rate of compensation until his normal retirement age (or the end 
of the current year if later) and retirement on such date with the 
normal form of retirement benefit under the plan.
    (4) The following totals:
    (i) Total nondeferred compensation paid or accrued during the 
taxable year for all employees covered under the plan and also for all 
employees of the employer.
    (ii) Total amount allocated during the year for the benefit of 
employees, former or retired employees, or their beneficiaries 
(including any insurance provided thereby or directly related thereto), 
less employee contributions during the year under the plan and, if a 
profit-sharing or stock bonus plan,

[[Page 433]]

also a breakdown of such total into the following components:
    (A) Amount originally allocated in the year, and
    (B) Amount reallocated in the year.
    (5) A schedule showing the total number of employees as of the close 
of the year for each of the following groups, based on reasonable 
estimates:
    (i) All employees ineligible for coverage under the plan because of 
requirements as to employment classification, specifying the reasons 
applicable to the group (as, for example, temporary, seasonal, part 
time, hourly pay basis, etc.).
    (ii) All employees ineligible for coverage under the plan because of 
requirements as to length of service and not included in subdivision (i) 
of this subparagraph.
    (iii) All employees ineligible for coverage under the plan because 
of requirements as to minimum age and not included in subdivision (i) or 
(ii) of this subparagraph.
    (iv) All employees ineligible for coverage under the plan solely 
because of requirements as to minimum rate of compensation.
    (v) All employees ineligible for coverage under the plan other than 
those employees included in subdivision (i), (ii), (iii), or (iv) of 
this subparagraph, specifying the reason applicable to the group.
    (vi) All employees ineligible for coverage under the plan for any 
reasons, which should be the sum of subdivisions (i) to (v), inclusive, 
of this subparagraph.
    (vii) All employees eligible for coverage but not covered under the 
plan.
    (viii) All employees covered under the plan.
    (ix) All employees of the employer, which should be the sum of 
subdivisions (vi), (vii), and (viii) of this subparagraph.

If it is claimed that the requirements of section 401(a)(3)(A) are 
satisfied, also the data and computations necessary to show that such 
requirements are satisfied.
    (6) In the case of a trust, a detailed balance sheet and a detailed 
statement of receipts and disbursements during the year; in the case of 
a nontrusteed annuity plan, a detailed statement of the names of the 
insurers, the contributions paid by the employer and by the employees, 
and a statement as to the amounts and kinds of premium refunds or 
similar credits made available and the disposition of such credits in 
the year.
    (7) If a pension or annuity plan, a detailed description of all the 
methods, factors, and assumptions used in determining costs and in 
adjusting the costs for actual experience under the plan (including any 
loadings, contingency reserves, or special factors and the basis of any 
insured costs or liabilities involved therein) explaining their source 
and application in sufficient detail to permit ready analysis and 
verification thereof, and, in the case of a trust, a detailed 
description of the basis used in valuing the investments held.
    (8) A statement of the applicable limitations under section 404(a) 
(1), (2), (3), or (7) and an explanation of the method of determining 
such limitations, a summary of the data, and a statement of computations 
necessary to determine the allowable deductions for the taxable year. 
Also, in the case of a pension or annuity plan, a summary of the costs 
or liabilities and adjustments for the year under the plan based on the 
application of the methods, factors, and assumptions used under the 
plan, in sufficient detail to permit ready verification of the 
reasonableness thereof.
    (9) A statement of the contributions paid under the plan for the 
taxable year showing the date and amount of each payment. Also, a 
summary of the deductions claimed for the taxable year for the plan with 
a breakdown of the deductions claimed into the following components:
    (i) For contributions paid in the taxable year before giving effect 
to the provisions of paragraph (7) of section 404(a).
    (ii) For contributions paid in prior taxable years beginning after 
December 31, 1941, in accordance with the carryover provisions of 
paragraphs (1) and (3) of section 404(a), before giving effect to the 
provisions of paragraph (7) thereof, and in accordance with the 
carryover provisions of section 404(d).

[[Page 434]]

    (iii) Any reductions or increases in the deductions in accordance 
with the provisions of paragraph (7) of section 404(a). However, if the 
information in this subdivision is filed prior to the filing of the 
information required by subparagraph (8) of this paragraph, then, in 
determining the limit of deduction under paragraph (7) of section 
404(a), the applicable percentage of the compensation otherwise paid or 
accrued during the year may be used.
    (b) For taxable years subsequent to the year for which all of the 
applicable information under paragraph (a) of this section (or 
corresponding provisions of prior regulations) has been filed, 
information is to be filed only to the following extent:
    (1) If there is any change in the plan, instruments, methods, 
factors, or assumptions upon which the data and information specified in 
paragraph (a) (1), (2), or (7) of this section are based, a detailed 
statement explaining the change and its effect is to be filed only for 
the taxable year in which the change is put into effect. However, if 
there is no such change, unless otherwise requested by the district 
director, merely a statement that there is no such change is to be 
filed.
    (2) The information specified in paragraph (a)(3) of this section 
which has been filed for a taxable year, unless otherwise requested by 
the district director and so long as the plan and the method and basis 
of allocations are not changed, is to be filed for subsequent years only 
to the extent of showing in the tabulation such information with respect 
to employees who, at any time in the taxable year, own, directly or 
indirectly, more than 5 percent of the voting stock, considering stock 
so owned by an individual's spouse or minor lineal descendant as owned 
by the individual for this purpose.
    (3) The information specified in paragraph (a) (4), (5), (6), (8), 
and (9) of this section.

In the case of corporate employers, the information required to be 
submitted by this paragraph shall, except as otherwise provided by the 
Commissioner, be filed on Form 2950 for taxable years ending on or after 
December 31, 1961. In the case of other employers, the information 
required to be submitted by this paragraph shall, except as otherwise 
provided by the Commissioner, be filed on Form 2950 for taxable years 
ending on or after December 31, 1962.
    (c) If a deduction is claimed under section 404(a)(5) for the 
taxable year, the taxpayer shall furnish such information as is 
necessary to show that the deduction is not allowable under the other 
paragraphs of section 404(a), that the amount paid is an ordinary and 
necessary expense or an expense for the production of income, and that 
the employees' rights to, or derived from, such employer's contribution 
or such compensation were nonforfeitable at the time the contribution or 
compensation was paid. In the case of corporate employers, the 
information required to be submitted by this paragraph shall, except as 
otherwise provided by the Commissioner, be filed on Form 2950 for 
taxable years ending on or after December 31, 1961. In the case of other 
employers, the information required to be submitted by this paragraph 
shall, except as otherwise provided by the Commissioner, be filed on 
Form 2950 for taxable years ending on or after December 31, 1962.
    (d) For the purpose of the information required by this section, 
contributions paid in a taxable year shall include those deemed to be so 
paid in accordance with the provisions of section 404(a)(6) and shall 
exclude those deemed to be paid in the prior taxable year in accordance 
with such provisions. As used in this section, ``taxable year'' refers 
to the taxable year of the employer and, unless otherwise requested by 
the district director, a ``year'' which is not specified as a ``taxable 
year'' may be taken as the taxable year of the employer or as the plan, 
trust, valuation, or group contract year with respect to which 
deductions are being claimed provided the same rule is followed 
consistently so that there is no gap or overlap in the information 
furnished for each item. In any case the date or period to which each 
item of information furnished relates should be clearly shown. All the 
information required by this section should be filed with the tax return 
for the taxable year in which the deduction is claimed, except that, 
unless sooner requested by the district director, such

[[Page 435]]

information, other than that specified in paragraph (a)(4)(i) and (9) of 
this section, may be filed within 12 months after the close of the 
taxable year provided there is filed with the tax return a statement 
that the information cannot reasonably be filed therewith, setting forth 
the reasons therefor.
    (e) In any case all the information and data required by this 
section must be filed in the office of the district director in which 
the employer files his tax returns and must be filed independently of 
any information and data otherwise submitted in connection with a 
determination of the qualification of the trust or plan under section 
401(a). The district director may, in addition, require any further 
information that he considers necessary to determine allowable 
deductions under section 404 or qualification under section 401. For 
taxable years ending on or before December 31, 1961, the district 
director may waive the filing of such information required by this 
section which he finds unnecessary in a particular case. For taxable 
years ending after December 31, 1961, the Commissioner may waive the 
filing of such information.
    (f) Records substantiating all data and information required by this 
section to be filed must be kept at all times available for inspection 
by internal revenue officers at the main office or place of business of 
the employer.
    (g) In the case of a plan which covers employees, some or all of 
whom are self-employed individuals and with respect to which a deduction 
is claimed under section 404(a) (1), (2), (3), or (7), paragraphs (a) 
and (b) of this section, and the provision of paragraph (d) of this 
section relating to the time for filing the information required by this 
section, shall not apply, but in lieu of the information required to be 
submitted by paragraphs (a) and (b) of this section, the employer shall, 
with the return for the taxable year in which the deduction is claimed, 
submit the information required by the form provided by the Internal 
Revenue Service for such purpose.
    (h) When a custodial account forms a part of a plan for which a 
deduction is claimed under section 404(a) (1), (2), (3), or (7), the 
information which under this section is to be submitted with respect to 
a qualified trust must be submitted with respect to such custodial 
account. Thus, for purposes of this section--
    (1) The term ``trust'' includes custodial account,
    (2) The term ``trustee'' includes custodian, and
    (3) The term ``trust indenture'' includes custodial agreement.
    (i) Except as provided under Sec. 1.503(d)-1(a) and Sec. 601.201 
of this chapter (Statement of Procedural Rules) in the case of a request 
for the determination of qualification of a trust under section 401 and 
exemption under section 501, paragraphs (a) through (h) of this section 
shall not apply for taxable years ending on or after December 31, 1971. 
For information to be furnished for taxable years ending on or after 
December 31, 1971, see Sec. 1.404(a)-2A.

[T.D. 6500, 25 FR 11683, Nov. 26, 1960, as amended by T.D. 6599, 27 FR 
4475, May 10, 1962; T.D. 6676, 28 FR 10144, Sept. 17, 1963; T.D. 7165, 
37 FR 5025, Mar. 9, 1972; T.D. 7168, 37 FR 5491, Mar. 16, 1972]