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TITLE 26-INTERNAL REVENUE CODE () Accounts established by employers and certain as- sociations of employees A trust created or organized in the United States by an employer for the exclusive benefit of his employees or their beneficiaries, or by an association of employees (which may include employees within the meaning of section 401(c)(1)) for the exclusive benefit of its mem- bers or their beneficiaries, shall be treated as an individual retirement account (described in subsection (a)), but only if the written govern- ing instrument creating the trust meets the fol- lowing requirements: (1) The trust satisfies the requirements of paragraphs (1) through (7) of subsection (a). (2) There is a separate accounting for the interest of each employee or member (or spouse of an employee or member). The assets of the trust may be held in a common fund for the account of all individuals who have an interest in the trust. (d) Tax treatment of distributions (1) In general Except as otherwise provided in this subsec- tion, any amount paid or distributed out of an individual retirement account or under an in- dividual retirement annuity shall be included in gross income by the payee or distributee, as the case may be, for the taxable year in which the payment or distribution is received. Notwithstanding any other provision of this title (including chapters 11 and 12), the basis I any person in such an account or annuity is zero. (2) Distributions of annuity contracts Paragraph (1) does not apply to any annu- ity contract which meets the requirements of paragraphs (1), (3), (4), and (5) of subsection (b) and which is distributed from an individ- ual retirement account. Section 72 applies to any such annuity contract, and for purposes of section 72 the investment in such contract is zero. (3) Rollover contribution An amount is described in this paragraph as a rollover contribution if it meets the require- ments of subparagraphs (A) and (B). (A) In general Paragraph (1) does not apply to any amount paid or distributed out of an indi- vidual retirement account or individual re- tirement annuity to the individual for whose benefit the account or annuity is maintained if- (i) the entire amount received (includ- ing money and any other property) is paid into an individual retirement account or individual retirement annuity (other than an endowment contract) or retirement bond for the benefit of such individual not later than the 60th day after the day on which he receives the payment or dis- tribution; or (ii) the entire amount received (includ- ing money and any other property) repre- sents the entire amount in the account or the entire value of the annuity and no 'So in original. The word "of" probably should appear here. amount in the account and no part of the value of the annuity is attributable to any source other than a rollover contribution from an employees' trust described in sec- tion 401(a) which is exempt from tax under section 501(a) (other than a trust forming part of a plan under which the individual was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan), or an annuity plan de- scribed in section 403(a) (other than a plan under which the individual was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan) and any earnings on such sums and the entire amount thereof is paid into another such trust (for the benefit of such individual) or annuity plan not later than the 60th day on which he receives the payment or distribution. (B) Limitation This paragraph does not apply to any amount described in subparagraph (A)(i) re- ceived by an individual from an individual retirement account or individual retirement annuity if at any time during the 3-year period ending on the day of such receipt such individual received any other amount described in that subparagraph from an in- dividual retirement account, individual re- tirement annuity, or a retirement bond which was not includible in his gross income because of the application of this para- graph. (4) Excess contributions returned before due date of return Paragraph (1) does not apply to the distri- bution of any contribution paid during a tax- able year to an individual retirement account or for an individual retirement annuity to the extent that such contribution exceeds the amount allowable as a deduction under sec- tion 219 or 220 if- (A) such distribution is received on or before the day prescribed by law (including extensions of time) for filing such individ- ual's return for such taxable year, (B) no deduction is allowed under section 219 or 220 with respect to such excess con- tribution, and (C) such distribution is accompanied by the amount of net income attributable to such excess contribution, In the case of such a distribution, for pur- poses of section 61, any net income described in subparagraph (C) shall be deemed to have beer earned and receivable in the taxable year in which such excess contribution is made. (5) Transfer of account incident to divorce The transfer of an individual's interest in an individual retirement account, individual retirement annuty, or retirement bond to his former spouse under a divorce decree or under a written instrument incident to such divorce is not to be considered a taxable transfer made by such individual notwith- standing any other provision of this subtitle, and such interest at the time of the transfer § 408 Page 318