Revenue Regulation No. 015-2025

Section 2 - Define "reasonable private retirement benefit plan"

Answer:

For purposes of these Regulations, the term "reasonable private retirement benefit plan" means a plan maintained by an employer for the benefit of some or all of its officials or employees, wherein contributions are made by such employer for the officials or employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.

SECTION 3. Private Retirement Benefit Plan. - A private retirement benefit plan (the "Retirement Plan") refers to an agreement whereby an employer provides des benefits to its officials and employees upon the latter's retirement.

A Retirement Plan may consist of a pension, gratuity, provident fund, stock bonus or profit-sharing plan, or any other similar plan maintained by an employer for the benefit of some or all of its officials and employees, wherein contributions are made by such employer or officials and employees, or both. It may be contributory or non-contributory on the part of the officials or employees.

Pension Plan

"Pension Plan" is a retirement plan established and maintained by an employer primarily to provide systematically for the payment of definitely determinable benefits to its employees over a period of years, usually for life, after retirement.

"Profit-Sharing Plan"

"Profit-Sharing Plan" is a plan established and maintained by an employer to provide for the participation in the profits by employees or their beneficiaries.

"Provident fund"

"Provident fund" is an investment fund that is voluntarily established by employer and employees to serve as long term savings to support aran employee's retirement.

"Stock Bonus Plan"

"Stock Bonus Plan" is a plan established and maintained by an employer to provide benefits similar to those of a profit-sharing plan, except that the contributions by the employer are not necessarily dependent upon the profits and the benefits are distributable in stock of the employloyer company.

"Gratuity Plan"

"Gratuity Plan" is a plan established and maintained by an employer to provide for the payment of definitely determined benefits to employees after retirement. This plan is similar to a pension plan, except that the benefits are not payable during a certain period or life of the retiree but totally and immediately after retirement.

The phrase "at no time shall any part of the corpus or income of the fund be used for, or diverted to, any purpose other than for the exclusive benefit of the said officials and employees" includes all objects or aims not solely designed for the proper satisfaction of all liabilities to employees covered by the trust.