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TITLE 26-INTERNAL REVENUE CODE bank or other person who demonstrates to the satisfaction of the Secretary that the manner in which he will administer the trust will be consistent with the requirements of this section. A trust shall not be disqualified under this paragraph merely because a person (including the employer) other than the trustee or custodian so administering the trust may be granted, under the trust instru- ment, the power to control the investment of the trust funds either by directing invest- ments (including reinvestments, disposals, and exchanges) or by disapproving proposed investments (including reinvestments. dispos- als, or exchanges). This paragraph shall not apply to a trust created or organized outside the United States before October 10, 1962, if, under section 402(c), it is treated as exempt from tax under section 501(a) on the day before such date; or, to the extent provided under regulations prescribed by the Secre- tary, to it trust which uses annuity, endow- ment, or life insurance contracts of a life in- surance company exclusively to fund the benefits prescribed by the trust, if the life in- surance company supplies annually such in- formation about trust transactions affecting owner-employees as the Secretary shall by forms or regulations prescribe. For purposes of this paragraph, the term "bank" means a bank as defined in section 581, an insured credit union (within the meaning of section 101(6) of the Federal Credit Union Act), a corporation which under the laws of the State of its incorporation is subject to su- pervison and examination by the commission- er of banking or other officer of such State in charge of the administration of the banking laws of such State, and, in the case of a trust created or organized outside the United States, a bank or trust company, wherever in- corporated, exercising fiduciary powers and subject to supervision and examination by governmental authority. (2) Under the plan- (A) the employees' rights to or derived from the contributions under the plan are nonforfeitable at the time the contributions are paid to or under the plan; and (B) in the case of a profit-sharing plan, there is a definite formula for determining the contributions to be made by the em- ployer on behalf of employees (other than owner-employees). Subparagraph (A) shall not apply to contribu- tions which, under provisions of the plan adopted pursuant to regulations prescribed by the Secretary to preclude the discrimination prohibited by subsection (a)(4), may not be used to provide benefits for designated em- ployees in the event of early termination of the plan. (3)(A) The plan benefits each employee having 3 or more years of service (within the meaning of section 410(a)(3)). (B) For purposes of subparagraph (A), the term "employee" does not include- (I) any employee included in a unit of em- ployees covered by a collective bargaining agreement described in section 410(b)(2)(A), and (ii) any employee who is a nonresident alien individual described in section 410(b)(2)(C). (4) Under the plan- (A) contributions or benefits are not pro- vided for any owner-employee unless such owner-employee has consented to being in- cluded under the plan; and (B) no benefits in excess of contributions made by an owner-employee as an employee may be paid to any owner-employee, except in the case of his becoming disabled (within the meaning of section 72(m)(7)), prior to his attaining the age of 59V2 years. (5) The plan does not permit- (A) contributions to be made by the em- ployer on behalf of any owner-employee in excess of the amounts which may be de- ducted under section 404 for the taxable year; (B) in the case of a plan which provides contributions or benefits only for owner-em- ployees, contributions to be made on behalf of any owner-employee in excess of the amounts which may be deducted under sec- tion 404 for the taxable year; and (C) if a distribution under the plan is made to any employee and if any portion of such distribution is an amount described in section 72(m)(5)(A)(i), contributions to be made on behalf of such employee for the 5 taxable years succeeding the taxable year in which such distribution is made. Subparagraphs (A) and (B) do not apply to contributions described in subsection (e). (6) Except as provided in this paragraph, the plan meets the requirements of subsec- tion (a)(4) without taking into account for any purpose contributions or benefits under chapter 2 (relating to tax on self-employment income), chapter 21 (relating to Federal In- surance Contributions Act), title II of the Social Security Act, as amended, or any other Federal or State law. If- (A) of the contributions deductible under section 404, not more than one-third is de- ductible by reason of contributions by the employer on behalf of owner-employees, and (B) taxes paid by the owner-employees under chapter 2 (relating to tax on self-em- ployment income), and the taxes which would be payable under such chapter 2 by the owner-employees but for paragraphs (4) and (5) of section 1402(c), are taken into ac- count as contributions by the employer on behalf of such owner-employees, then taxes paid under section 3111 (relating to tax on employers) with respect to an em- ployee may, for purposes of subsection (a)(4), be taken into account as contributions by the employer for such employee under the plan. (7) Under the plan, if an owner-employee dies before his entire interest has been dis- tributed to him, or if distribution has been commenced in accordance with subsection (a)(9)(B) to his surviving spouse and such sur- viving spouse dies before his entire interest has been distributed to such surviving spouse, his entire interest (or the remaining part of such interest if distribution thereof has com- Page 290