Page 320

TITLE 26-INTERNAL REVENUE CODE count described in subsection (a). For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof. (I) Reports The trustee of an individual retirement ac- count and the issuer of an endowment contract described in subsection (b) or an individual re- tirement annuity shall make such reports re- garding such account, contract, or annuity to the Secretary and to the individuals for whom the account, contract, or annuity is, or is to be, maintained with respect to contributions, distri- butions, and such other matters as the Secre- tary may require under regulations. The re- ports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by those regula- tions. (j) Cross references (1) For tax on excess contributions in individual retire. ment accounts or annuities, see section 4963. (2) For tax on certain accumulations in individual re- tirement accounts or annuities, see section 4974. (Added Pub. L. 93-406, title II, § 2002(b), Sept. 2, 1974, 88 Stat. 959, and amended Pub. L. 94- 455, title XV, § 1501(b)(2), (5), (10), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1735- 1737, 1834.) AMENDMENTS 1976-Subsecs. (a)(2), (6), (b). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (c)(2). Pub. L. 94-455, § 1501(b)(2), substitut- ed "member (or spouse of an employee or member)" for "member". Subsec. (d)(1). Pub. L. 94-455. § 1501(b)(10), substi- tuted "Notwithstanding any other provision of this title (including chapters 11 and 12), the basis" for "The basis". Subsec. (d)(4). Pub. L. 94-455, § 1501(b)(5), added ref- erence to section 220 and substituted "In the case of such a distribution, for purposes of section 61, any net income described in subparagraph (C) shall be deemed to have been earned and receivable in the taxable year in which such excess contribution is made" for "Any net income described in subparagraph (C) shall be in- cluded in the grons income of the individual for the taxable year in which received". Subsecs. (h), (I). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". EFFECTIVE DATE OF 1976 AMENDMEFr Amendment of subsecs. (c), (d) by section 1501(b)(2), (5), (10) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1501(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 420 of this title. EFFECTIVE DATE Section applicable to taxable years beginning after Dec. 31, 1974, see section 2002(i)(1) of Pub. L. 93-406, set out as an Effective Date note under section 219 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 37, 46, 50A, 56, 72, 219, 220, 402, 403, 409, 415, 805, 901, 2039, 2517, 4973, 4974, 4975, 6047, 6058, 6104, 6693 of this title; title 12 section 1464; title 29 sections 1051, 1081, 1103, 1107. 1108. § 409. Retirement bonds (a) Retirement bond For purposes of this section and section 219(a), the term "retirement bond" means a bond issued under the Second Liberty Bond Act, as amended, which by its terms, or by regu- lations prescribed by the Secretary under such Act- (1) provides for payment of interest, or in- vestment yield, only on redemption; (2) provides that no interest, or investment yield, is payable if the bond is redeemed within 12 months after the date of its issu- ance; (3) provides that it ceases to bear interest, or provide investment yield on the earlier of- (A) the date on which the individual in whose name it is purchased (hereinafter in this section referred to as the "registered owner") attains age 70 ; or (B) 5 years after the date on which the registered owner dies, but not later than the date on which he would have attained the age 70/2 had he lived; (4) provides that, except in the case of a rol- lover contribution described in subsection (b)(3)(C) or in section 402(a)(5), 403(a)(4), or 408(d)(3) the registered owner may not con- tribute for the purchase of such bonds in excess of $1,500 for any taxable year; and (5) is not transferable. (b) Income tax treatment of bonds (1) In general Except as otherwise provided in this subsec- tion, on the redemption of a retirement bond the entire proceeds shall be included in the gross income of the taxpayer entitled to the proceeds on redemption. If the registered owner has not tendered it for redemption before the close of the taxable year in which he attains age 70 , such individual shall in- clude in his gross income for such taxable year the amount of proceeds he would have received if the bond had been redeemed at age 70%2. The provisions of section 72 (relat- ing to annuities) and section 1232 (relating to bonds and other evidences of indebtedness) shall not apply to a retirement bond. (2) Basis The basis of a retirement bond is zero. (3) Exceptions (A) Redemption within 12 months If a retirement bond is redeemed within 12 months after the date of its issuance, the proceeds are excluded from gross income if no deduction is allowed under section 219 on account of the purchase of such bond. (B) Redemption after age 70 If a retirement bond is redeemed after the close of the taxable year in which the regis- tered owner attains age 701/, the proceeds from the redemption of the bond are ex- cluded from the gross income of the regis- tered owner to the extent that such pro. ceeds were includible in his gross income for such taxable year. § 409 Page 320