Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(21)(D)(i), substituted “paragraph (9) or (17)” for “paragraph (9), (17), or (20)” in section catchline.
Forms: Form 1024
(a) Certain requirements must be met in the case of organizations described in section 501(c)(9)
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(21)(D)(ii), substituted “section 501(c)(9)” for “paragraph (9) or (20) of section 501(c)” in heading.
(1) Voluntary employees’ beneficiary associations, etc. An organization described in section 501(c)(9) which is part of a plan shall not be exempt from tax under section 501(a) unless such plan meets the requirements of subsection (b) of this section.
Amended 1986, 1988, 1989, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(21)(D)(iii), substituted “section 501(c)(9)” for “paragraph (9) or (20) of subsection (c) of section 501”.
- 1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(2), amended par. (1) to read as if amendments by Pub. L. 100–647, § 1011B(a)(27)(C), had not been enacted, see 1988 Amendment note below.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011B(a)(27)(C), inserted at end “This paragraph shall not apply to any organization by reason of a failure to meet the requirements of subsection (b) with respect to a benefit to which section 89 applies.”
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1851(c)(1), struck out “of an employer” before “shall”.
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(2) Exception for collective bargaining agreements Paragraph (1) shall not apply to any organization which is part of a plan maintained pursuant to an agreement between employee representatives and 1 or more employers if the Secretary finds that such agreement is a collective bargaining agreement and that such plan was the subject of good faith bargaining between such employee representatives and such employer or employers.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1851(c)(4), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Paragraph (1) shall not apply to any organization which is part of a plan maintained pursuant to 1 or more collective bargaining agreements between 1 or more employee organizations and 1 or more employers.”
(b) Nondiscrimination requirements
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(1) In general Except as otherwise provided in this subsection, a plan meets the requirements of this subsection only if—
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1851(c)(2), (3), substituted “as otherwise provided in this subsection” for “as provided in paragraph (2)” in introductory provision, and in subpar. (B) substituted “highly compensated individuals” for “highly compensated employees”.
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(A) each class of benefits under the plan is provided under a classification of employees which is set forth in the plan and which is found by the Secretary not to be discriminatory in favor of employees who are highly compensated individuals, and
(B) in the case of each class of benefits, such benefits do not discriminate in favor of employees who are highly compensated individuals.
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A life insurance, disability, severance pay, or supplemental unemployment compensation benefit shall not be considered to fail to meet the requirements of subparagraph (B) merely because the benefits available bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of employees covered by the plan.
(2) Exclusion of certain employees For purposes of paragraph (1), there may be excluded from consideration—
Amended 1986, 1988, 1989
- 1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(2), amended par. (2) to read as if amendments by Pub. L. 100–647, § 1011B(a)(31)(B), had not been enacted, see 1988 Amendment note below.
- 1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(1), amended par. (2) to read as if amendments by Pub. L. 99–514, § 1151(g)(6), had not been enacted, see 1986 Amendment note below.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011B(a)(31)(B), substituted “there shall be” for “there may be” and “who are” for “who may be”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1151(g)(6), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “For purposes of paragraph (1), there may be excluded from consideration—
“(A) employees who have not completed 3 years of service,
“(B) employees who have not attained age 21,
“(C) seasonal employees or less than half-time employees,
“(D) employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and 1 or more employers which the Secretary finds to be a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining between such employee representatives and such employer or employers, and
“(E) employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)).”
(A) employees who have not completed 3 years of service,
(B) employees who have not attained age 21,
(C) seasonal employees or less than half-time employees,
(D) employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and 1 or more employers which the Secretary finds to be a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining between such employee representatives and such employer or employers, and
(E) employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)).
(3) Application of subsection where other nondiscrimination rules provided In the case of any benefit for which a provision of this chapter other than this subsection provides nondiscrimination rules, paragraph (1) shall not apply but the requirements of this subsection shall be met only if the nondiscrimination rules so provided are satisfied with respect to such benefit.
(4) Aggregation rules At the election of the employer, 2 or more plans of such employer may be treated as 1 plan for purposes of this subsection.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1151(e)(2)(B), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “For purposes of this subsection—
“(A) Aggregation of plans.—At the election of the employer, 2 or more plans of such employer may be treated as 1 plan.
“(B) Treatment of related employers.—Rules similar to the rules of subsections (b), (c), (m), and (n) of section 414 shall apply. For purposes of the preceding sentence, section 414(n) shall be applied without regard to paragraph (5).”
(5) Highly compensated individual For purposes of this subsection, the determination as to whether an individual is a highly compensated individual shall be made under rules similar to the rules for determining whether an individual is a highly compensated employee (within the meaning of section 414(q)).
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1114(b)(16), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “For purposes of this subsection, the term ‘highly compensated individual’ has the meaning given such term by section 105(h)(5). For purposes of the preceding sentence, section 105(h)(5) shall be applied by substituting ‘10 percent’ for ‘25 percent’.”
(6) Compensation For purposes of this subsection, the term “compensation” has the meaning given such term by section 414(s).
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1151(j)(3), added par. (6).
(7) Compensation limit A plan shall not be treated as meeting the requirements of this subsection unless under the plan the annual compensation of each employee taken into account for any year does not exceed $200,000. The Secretary shall adjust the $200,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B). This paragraph shall not apply in determining whether the requirements of section 79(d) are met.
Amended 1988, 1989, 1993, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16 substituted “$200,000” for “$150,000” in two places.
- 1993 Pub. L. 103-66 Pub. L. 103–66 substituted “Compensation limit” for “$200,000 compensation limit” in heading and “exceed $150,000. The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).” for “exceed $200,000. The Secretary shall adjust the $200,000 amount at the same time and in the same manner as under section 415(d).” in text.
- 1989 Pub. L. 101-140 Pub. L. 101–140, § 204(c), inserted at end “This paragraph shall not apply in determining whether the requirements of section 79(d) are met.”
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011B(a)(32), added par. (7).
(c) Requirement that organization notify Secretary that it is applying for tax-exempt status
(1) In general An organization shall not be treated as an organization described in paragraph (9) or (17) of section 501(c)—
“As the Secretary may by regulations prescribe” leaves this to Treasury. No regulation cites this provision (eCFR, Oct 19, 2026)
(A) unless it has given notice to the Secretary, in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of such status, or
(B) for any period before the giving of such notice, if such notice is given after the time prescribed by the Secretary by regulations for giving notice under this subsection.
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(21)(D)(iv), substituted “paragraph (9) or (17)” for “paragraph (9), (17), or (20)” in introductory provisions.
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(2) Special rule for existing organizations In the case of any organization in existence on July 18, 1984, the time for giving notice under paragraph (1) shall not expire before the date 1 year after such date of the enactment.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1899A(16), substituted “July 18, 1984” for “the date of the enactment of the Tax Reform Act of 1984”.