IRS Allows for Commingling of Retirement Assets in Group Trusts

According to the ruling, on or after January 10, 2011, provided that certain requirements spelled out in the ruling are satisfied, the assets of qualified plans under § 401(a), IRAs, and eligible governmental plans under § 457(b) may be pooled in a group trust described in Rev. Rul. 81-100, as clarified and modified by Rev. Rul. 2004-67 and this revenue ruling, with the assets of custodial accounts under § 403(b)(7), retirement income accounts under §403(b)(9), and § 401(a)(24) governmental plans without affecting the tax status of the group trust or the tax status of each of the separate group trust retiree benefit plans participating in the group trust.  

The IRS said a custodial account under § 403(b)(7) will fail to satisfy § 1.403(b)-8(d)(2)(i) if the assets of the account are invested other than in the stock of a regulated investment company, and any group trust in which the assets of a § 403(b)(7) custodial account is invested must comply with this restriction. Accordingly, as a result of this investment restriction, the assets of a custodial account under § 403(b)(7) generally will be commingled in a group trust that solely contains the assets of other § 403(b)(7) custodial accounts.  

The ruling lists the requirements for the tax status of the group trust to be derived from the tax status of the participating entities to the extent of their equitable interests in the group trust.