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TITLE 26-INTERNAL REVENUE CODE the assets will be consistent with the require- ments of this section. For purposes of this title, in the case of a custo- dial account or contract treated as a qualified trust under this section by reason of this sub- section, the person holding the assets of such account or holding such contract shall be treat- ed as the trustee thereof. (g) Annuity defined For purposes of this section and sections 402, 403, and 404, the term "annuity" includes a face-amount certificate, as defined in section 2(a)(15) of the Investment Company Act of 1940 (15 U.S.C., sec. 80a-2); but does not include any contract or certificate issued after Decem- ber 31, 1962, which is transferable, if any person other than the trustee of a trust de- scribed in section 401(a) which is exempt from tax under section 501(a) is the owner of such contract or certificate. (h) Medical, etc., benefits for retired employees and their spouses and dependents Under regulations prescribed by the Secre- tary, a pension or annuity plan may provide for the payment of benefits for sickness, accident, hospitalization, and medical expenses of retired employees, their spouses and their dependents, but only if- (1) such benefits are subordinate to the re- tirement benefits provided by the plan, (2) a separate account is established and maintained for such benefits, (3) the employer's contributions to such separate account are reasonable and ascer- tainable, (4) it is impossible, at any time prior to the satisfaction of all liabilities under the plan to provide such benefits, for any part of the corpus or income of such separate account to be (within the taxable year or thereafter) used for, or diverted to, any purpose other than the providing of such benefits, and (5) notwithstanding the provisions of sub- section (a)(2), upon the satisfaction of all li- abilities under the plan to provide such bene- fits, any amount remaining in such separate account must, under the terms of the plan, be returned to the employer. (I) Certain union-negotiated pension plans In the case of a trust forming part of a pen- sion plan which has been determined by the Secretary to constitute a qualified trust under subsection (a) and to be exempt from taxation under section 501(a) for a period beginning after contributions were first made to or for such trust, if it is shown to the satisfaction of the Secretary that- (1) such trust was created pursuant to a col- lective bargaining agreement between em- ployee representatives and one or more em- ployers, (2) any disbursements of contributions, made to or for such trust before the time as of which the Secretary or his delegate deter- mined that the trust constituted a qualified trust, substantially complied with the terms of the trust, and the plan of which the trust is a part, as subsequently qualified, and (3) before the time as of which the Secre- tary determined that the trust constitutes a qualified trust, the contributions to or for such trust were not used in a manner which would Jeopardize the interests of its beneficia- ries, then such trust shall be considered as having constituted a qualified trust under subsection (a) and as having been exempt from taxation under section 501(a) for the period beginning on the date on which contributions were first made to or for such trust and ending on the date such trust first constituted (without regard to this subsection) a qualified trust under subsection (a). (j) Defined benefit plans providing benefits for self- employed individuals and shareholder-employees (I) In general A defined benefit plan satisfies the require- ments of this subsection only if the basic benefit accruing under the plan for each plan year of participation by an employee within the meaning of subsection (c)(1) (or a share- holder-employee) is permissible under regula- tions prescribed by the Secretary under this subsection to insure that there will be reason- able comparability (assuming level funding) between the maximum retirement benefits which may be provided with favorable tax treatment under this title for such employees under- (A) defined contribution plans, (B) defined benefit plans, and (C) a combination of defined contribution plans and defined benefit plans. (2) Guidelines for regulations The regulations prescribed under this sub- section shall provide that a plan does not sat- isfy the requirements of this subsection if, under the plan, the basic benefit of any em- ployee within the meaning of subsection (c)(1) (or a shareholder-employee) may exceed the sum of the products for each plan year of participation of- (A) his annual compensation (not in excess of $50,000) for such year, and (B) the applicable percentage determined under paragraph (3). (3) Applicable percentage (A) Table For purposes of paragraph (2), the appli- cable percentage for any individual for any plan year shall be based on the percentage shown on the following table opposite his age when his current period of participation in the plan began. Applicable Age when participation began: percentage 30 or less .............................................. 6.5 35 ............................................................. 5.4 40 ............................................................. 4.4 45 ............................................................. 3.6 50 ......................... 3.0 55 ............................................................ 2.5 60 or over ............................................... 2.0 (B) Additional requirements The regulations prescribed under this subsection shall include provisions- (I) for applicable percentages for ages between any two ages shown on the table, Page 292 § 401