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Internal Revenue Code, § 402. Taxability Of Beneficiary Of Employees' Trust

I.R.C. § 402(a) Taxability Of Beneficiary Of Exempt Trust
Except as otherwise provided in this section, any amount actually distributed to any distributee by any employees' trust described in section 401(a) which is exempt from tax under section 501(a) shall be taxable to the distributee, in the taxable year of the distributee in which distributed, under section 72 (relating to annuities).
I.R.C. § 402(b) Taxability Of Beneficiary Of Nonexempt Trust
I.R.C. § 402(b)(1) Contributions
Contributions to an employees' trust made by an employer during a taxable year of the employer which ends with or within a taxable year of the trust for which the trust is not exempt from tax under section 501(a) shall be included in the gross income of the employee in accordance with section 83 (relating to property transferred in connection with performance of services), except that the value of the employee's interest in the trust shall be substituted for the fair market value of the property for purposes of applying such section.
I.R.C. § 402(b)(2) Distributions
The amount actually distributed or made available to any distributee by any trust described in paragraph (1) shall be taxable to the distributee, in the taxable year in which so distributed or made available, under section 72 (relating to annuities), except that distributions of income of such trust before the annuity starting date (as defined in section 72(c)(4)) shall be included in the gross income of the employee without regard to section 72(e)(5) (relating to amounts not received as annuities).
I.R.C. § 402(b)(3) Grantor Trusts
A beneficiary of any trust described in paragraph (1) shall not be considered the owner of any portion of such trust under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners).
I.R.C. § 402(b)(4) Failure To Meet Requirements Of Section 410(b)
I.R.C. § 402(b)(4)(A) Highly Compensated Employees
If 1 of the reasons a trust is not exempt from tax under section 501(a) is the failure of the plan of which it is a part to meet the requirements of section 401(a)(26) or 410(b), then a highly compensated employee shall, in lieu of the amount determined under paragraph (1) or (2) include in gross income for the taxable year with or within which the taxable year of the trust ends an amount equal to the vested accrued benefit of such employee (other than the employee's investment in the contract) as of the close of such taxable year of the trust.
I.R.C. § 402(b)(4)(B) Failure To Meet Coverage Tests
If a trust is not exempt from tax under section 501(a) for any taxable year solely because such trust is part of a plan which fails to meet the requirements of section 401(a)(26) or 410(b), paragraphs (1) and (2) shall not apply by reason of such failure to any employee who was not a highly compensated employee during—
I.R.C. § 402(b)(4)(B)(i)
such taxable year, or
I.R.C. § 402(b)(4)(B)(ii)
any preceding period for which service was creditable to such employee under the plan.
I.R.C. § 402(b)(4)(C) Highly Compensated Employee
For purposes of this paragraph, the term “highly compensated employee” has the meaning given such term by section 414(q).
I.R.C. § 402(c) Rules Applicable To Rollovers From Exempt Trusts
I.R.C. § 402(c)(1) Exclusion From Income
If—
I.R.C. § 402(c)(1)(A)
any portion of the balance to the credit of an employee in a qualified trust is paid to the employee in an eligible rollover distribution,
I.R.C. § 402(c)(1)(B)
the distributee transfers any portion of the property received in such distribution to an eligible retirement plan, and
I.R.C. § 402(c)(1)(C)
in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,
then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.
I.R.C. § 402(c)(2) Maximum Amount Which May Be Rolled Over
In the case of any eligible rollover distribution, the maximum amount transferred to which paragraph (1) applies shall not exceed the portion of such distribution which is includible in gross income (determined without regard to paragraph (1)). The preceding sentence shall not apply to such distribution to the extent—
I.R.C. § 402(c)(2)(A)
such portion is transferred in a direct trustee-to-trustee transfer to a qualified trust or to an annuity contract described in section 403(b) and such trust or contract provides for separate accounting for amounts so transferred (and earnings thereon), including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, or
I.R.C. § 402(c)(2)(B)
such portion is transferred to an eligible retirement plan described in clause (i) or (ii) of paragraph (8)(B).
In the case of a transfer described in subparagraph (A) or (B), the amount transferred shall be treated as consisting first of the portion of such distribution that is includible in gross income (determined without regard to paragraph (1)).
I.R.C. § 402(c)(3) Time Limit On Transfers
I.R.C. § 402(c)(3)(A) In General
Except as provided in subparagraphs (B) and (C), paragraph (1) shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed.
I.R.C. § 402(c)(3)(B) Hardship Exception
The Secretary may waive the 60-day requirement under subparagraph (A) where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.
I.R.C. § 402(c)(3)(C) Rollover Of Certain Plan Loan Offset Amounts
I.R.C. § 402(c)(3)(C)(i) In General
In the case of a qualified plan loan offset amount, paragraph (1) shall not apply to any transfer of such amount made after the due date (including extensions) for filing the return of tax for the taxable year in which such amount is treated as distributed from a qualified employer plan.
I.R.C. § 402(c)(3)(C)(ii) Qualified Plan Loan Offset Amount
For purposes of this subparagraph, the term “qualified plan loan offset amount” means a plan loan offset amount which is treated as distributed from a qualified employer plan to a participant or beneficiary solely by reason of—
I.R.C. § 402(c)(3)(C)(ii)(I)
the termination of the qualified employer plan, or
I.R.C. § 402(c)(3)(C)(ii)(II)
the failure to meet the repayment terms of the loan from such plan because of the severance from employment of the participant.
I.R.C. § 402(c)(3)(C)(iii) Plan Loan Offset Amount
For purposes of clause (ii), the term “plan loan offset amount’“ means the amount by which the participant's accrued benefit under the plan is reduced in order to repay a loan from the plan.
I.R.C. § 402(c)(3)(C)(iv) Limitation
This subparagraph shall not apply to any plan loan offset amount unless such plan loan offset amount relates to a loan to which section 72(p)(1) does not apply by reason of section 72(p)(2).
I.R.C. § 402(c)(3)(C)(v) Qualified Employer Plan
For purposes of this subsection, the term “qualified employer plan” has the meaning given such term by section 72(p)(4).
I.R.C. § 402(c)(4) Eligible Rollover Distribution
For purposes of this subsection, the term “eligible rollover distribution” means any distribution to an employee of all or any portion of the balance to the credit of the employee in a qualified trust; except that such term shall not include—
I.R.C. § 402(c)(4)(A)
any distribution which is one of a series of substantially equal periodic payments (not less frequently than annually) made—
I.R.C. § 402(c)(4)(A)(i)
for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and the employee's designated beneficiary, or
I.R.C. § 402(c)(4)(A)(ii)
for a specified period of 10 years or more,
I.R.C. § 402(c)(4)(B)
any distribution to the extent such distribution is required under section 401(a)(9), and
I.R.C. § 402(c)(4)(C)
any distribution which is made upon hardship of the employee.
If all or any portion of a distribution during 2009 is treated as an eligible rollover distribution but would not be so treated if the minimum distribution requirements under section 401(a)(9) had applied during 2009, such distribution shall not be treated as an eligible rollover distribution for purposes of section 401(a)(31) or 3405(c) or subsection (f) of this section.
I.R.C. § 402(c)(5) Transfer Treated As Rollover Contribution Under Section 408
For purposes of this title, a transfer to an eligible retirement plan described in clause (i) or (ii) of paragraph (8)(B) resulting in any portion of a distribution being excluded from gross income under paragraph (1) shall be treated as a rollover contribution described in section 408(d)(3).
I.R.C. § 402(c)(6) Sales Of Distributed Property
For purposes of this subsection—
I.R.C. § 402(c)(6)(A) Transfer Of Proceeds From Sale Of Distributed Property Treated As Transfer Of Distributed Property
The transfer of an amount equal to any portion of the proceeds from the sale of property received in the distribution shall be treated as the transfer of property received in the distribution.
I.R.C. § 402(c)(6)(B) Proceeds Attributable To Increase In Value
The excess of fair market value of property on sale over its fair market value on distribution shall be treated as property received in the distribution.
I.R.C. § 402(c)(6)(C) Designation Where Amount Of Distribution Exceeds Rollover Contribution
In any case where part or all of the distribution consists of property other than money—
I.R.C. § 402(c)(6)(C)(i)
the portion of the money or other property which is to be treated as attributable to amounts not included in gross income, and
I.R.C. § 402(c)(6)(C)(ii)
the portion of the money or other property which is to be treated as included in the rollover contribution,
shall be determined on a ratable basis unless the taxpayer designates otherwise. Any designation under this subparagraph for a taxable year shall be made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). Any such designation, once made, shall be irrevocable.
I.R.C. § 402(c)(6)(D) Nonrecognition Of Gain Or Loss
No gain or loss shall be recognized on any sale described in subparagraph (A) to the extent that an amount equal to the proceeds is transferred pursuant to paragraph (1).
I.R.C. § 402(c)(7) Special Rule For Frozen Deposits
I.R.C. § 402(c)(7)(A) In General
The 60-day period described in paragraph (3) shall not—
I.R.C. § 402(c)(7)(A)(i)
include any period during which the amount transferred to the employee is a frozen deposit, or
I.R.C. § 402(c)(7)(A)(ii)
end earlier than 10 days after such amount ceases to be a frozen deposit.
I.R.C. § 402(c)(7)(B) Frozen Deposits
For purposes of this subparagraph, the term “frozen deposit” means any deposit which may not be withdrawn because of—
I.R.C. § 402(c)(7)(B)(i)
the bankruptcy or insolvency of any financial institution, or
I.R.C. § 402(c)(7)(B)(ii)
any requirement imposed by the State in which such institution is located by reason of the bankruptcy or insolvency (or threat thereof) of 1 or more financial institutions in such State.
A deposit shall not be treated as a frozen deposit unless on at least 1 day during the 60-day period described in paragraph (3) (without regard to this paragraph) such deposit is described in the preceding sentence.
I.R.C. § 402(c)(8) Definitions
For purposes of this subsection—
I.R.C. § 402(c)(8)(A) Qualified Trust
The term “qualified trust” means an employees' trust described in section 401(a) which is exempt from tax under section 501(a).
I.R.C. § 402(c)(8)(B) Eligible Retirement Plan
The term “eligible retirement plan” means—
I.R.C. § 402(c)(8)(B)(i)
an individual retirement account described in section 408(a),
I.R.C. § 402(c)(8)(B)(ii)
an individual retirement annuity described in section 408(b) (other than an endowment contract),
I.R.C. § 402(c)(8)(B)(iii)
a qualified trust,
I.R.C. § 402(c)(8)(B)(iv)
an annuity plan described in section 403(a),
I.R.C. § 402(c)(8)(B)(v)
an eligible deferred compensation plan described in section 457(b) which is maintained by an eligible employer described in section 457(e)(1)(A), and
I.R.C. § 402(c)(8)(B)(vi)
an annuity contract described in section 403(b).
If any portion of an eligible rollover distribution is attributable to payments or distributions from a designated Roth account (as defined in section 402A), an eligible retirement plan with respect to such portion shall include only another designated Roth account and a Roth IRA.
I.R.C. § 402(c)(9) Rollover Where Spouse Receives Distribution After Death Of Employee
If any distribution attributable to an employee is paid to the spouse of the employee after the employee's death, the preceding provisions of this subsection shall apply to such distribution in the same manner as if the spouse were the employee.
I.R.C. § 402(c)(10) Separate Accounting
Unless a plan described in clause (v) of paragraph (8)(B) agrees to separately account for amounts rolled into such plan from eligible retirement plans not described in such clause, the plan described in such clause may not accept transfers or rollovers from such retirement plans.
I.R.C. § 402(c)(11) Distributions To Inherited Individual Retirement Plan Of Nonspouse Beneficiary
I.R.C. § 402(c)(11)(A) In General
If, with respect to any portion of a distribution from an eligible retirement plan described in paragraph (8)(B)(iii) of a deceased employee, a direct trustee-to-trustee transfer is made to an individual retirement plan described in clause (i) or (ii) of paragraph (8)(B) established for the purposes of receiving the distribution on behalf of an individual who is a designated beneficiary (as defined by section 401(a)(9)(E)) of the employee and who is not the surviving spouse of the employee—
I.R.C. § 402(c)(11)(A)(i)
the transfer shall be treated as an eligible rollover distribution,
I.R.C. § 402(c)(11)(A)(ii)
the individual retirement plan shall be treated as an inherited individual retirement account or individual retirement annuity (within the meaning of section 408(d)(3)(C)) for purposes of this title, and
I.R.C. § 402(c)(11)(A)(iii)
section 401(a)(9)(B) (other than clause (iv) thereof) shall apply to such plan.
I.R.C. § 402(c)(11)(B) Certain Trusts Treated As Beneficiaries
For purposes of this paragraph, to the extent provided in rules prescribed by the Secretary, a trust maintained for the benefit of one or more designated beneficiaries shall be treated in the same manner as a designated beneficiary.
I.R.C. § 402(d) Taxability Of Beneficiary Of Certain Foreign Situs Trusts
For purposes of subsections (a), (b), and (c), a stock bonus, pension, or profit-sharing trust which would qualify for exemption from tax under section 501(a) except for the fact that it is a trust created or organized outside the United States shall be treated as if it were a trust exempt from tax under section 501(a).
I.R.C. § 402(e) Other Rules Applicable To Exempt Trusts
I.R.C. § 402(e)(1) Alternate Payees
I.R.C. § 402(e)(1)(A) Alternate Payee Treated As Distributee
For purposes of subsection (a) and section 72, an alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p)).
I.R.C. § 402(e)(1)(B) Rollovers
If any amount is paid or distributed to an alternate payee who is the spouse or former spouse of the participant by reason of any qualified domestic relations order (within the meaning of section 414(p)), subsection (c) shall apply to such distribution in the same manner as if such alternate payee were the employee.
I.R.C. § 402(e)(2) Distributions By United States To Nonresident Aliens
The amount includible under subsection (a) in the gross income of a nonresident alien with respect to a distribution made by the United States in respect of services performed by an employee of the United States shall not exceed an amount which bears the same ratio to the amount includible in gross income without regard to this paragraph as—
I.R.C. § 402(e)(2)(A)
the aggregate basic pay paid by the United States to such employee for such services, reduced by the amount of such basic pay which was not includible in gross income by reason of being from sources without the United States, bears to
I.R.C. § 402(e)(2)(B)
the aggregate basic pay paid by the United States to such employee for such services. In the case of distributions under the civil service retirement laws, the term “basic pay” shall have the meaning provided in section 8331(3) of title 5, United States Code.
I.R.C. § 402(e)(3) Cash Or Deferred Arrangements
For purposes of this title, contributions made by an employer on behalf of an employee to a trust which is a part of a qualified cash or deferred arrangement (as defined in section 401(k)(2)) or which is part of a salary reduction agreement under section 403(b) shall not be treated as distributed or made available to the employee nor as contributions made to the trust by the employee merely because the arrangement includes provisions under which the employee has an election whether the contribution will be made to the trust or received by the employee in cash.
I.R.C. § 402(e)(4) Net Unrealized Appreciation
I.R.C. § 402(e)(4)(A) Amounts Attributable To Employee Contributions
For purposes of subsection (a) and section 72, in the case of a distribution other than a lump sum distribution, the amount actually distributed to any distributee from a trust described in subsection (a) shall not include any net unrealized appreciation in securities of the employer corporation attributable to amounts contributed by the employee (other than deductible employee contributions within the meaning of section 72(o)(5)). This subparagraph shall not apply to a distribution to which subsection (c) applies.
I.R.C. § 402(e)(4)(B) Amounts Attributable To Employer Contributions
For purposes of subsection (a) and section 72, in the case of any lump sum distribution which includes securities of the employer corporation, there shall be excluded from gross income the net unrealized appreciation attributable to that part of the distribution which consists of securities of the employer corporation. In accordance with rules prescribed by the Secretary, a taxpayer may elect, on the return of tax on which a lump sum distribution is required to be included, not to have this subparagraph apply to such distribution.
I.R.C. § 402(e)(4)(C) Determination Of Amounts And Adjustments
For purposes of subparagraphs (A) and (B), net unrealized appreciation and the resulting adjustments to basis shall be determined in accordance with regulations prescribed by the Secretary.
I.R.C. § 402(e)(4)(D) Lump-Sum Distribution
For purposes of this paragraph—
I.R.C. § 402(e)(4)(D)(i) In General
The term “lump-sum distribution” means the distribution or payment within one taxable year of the recipient of the balance to the credit of an employee which becomes payable to the recipient—
I.R.C. § 402(e)(4)(D)(i)(I)
on account of the employee's death,
I.R.C. § 402(e)(4)(D)(i)(II)
after the employee attains age 59 1/2,
I.R.C. § 402(e)(4)(D)(i)(III)
on account of the employee's separation from service, or
I.R.C. § 402(e)(4)(D)(i)(IV)
after the employee has become disabled (within the meaning of section 72(m)(7)),
from a trust which forms a part of a plan described in section 401(a) and which is exempt from tax under section 501 or from a plan described in section 403(a). Subclause (III) of this clause shall be applied only with respect to an individual who is an employee without regard to section 401(c)(1), and subclause (IV) shall be applied only with respect to an employee within the meaning of section 401(c)(1). For purposes of this clause, a distribution to two or more trusts shall be treated as a distribution to one recipient. For purposes of this paragraph, the balance to the credit of the employee does not include the accumulated deductible employee contributions under the plan (within the meaning of section 72(o)(5)).
I.R.C. § 402(e)(4)(D)(ii) Aggregation Of Certain Trusts And Plans
For purposes of determining the balance to the credit of an employee under clause (i)
I.R.C. § 402(e)(4)(D)(ii)(I)
all trusts which are part of a plan shall be treated as a single trust, all pension plans maintained by the employer shall be treated as a single plan, all profit-sharing plans maintained by the employer shall be treated as a single plan, and all stock bonus plans maintained by the employer shall be treated as a single plan, and
I.R.C. § 402(e)(4)(D)(ii)(II)
trusts which are not qualified trusts under section 401(a) and annuity contracts which do not satisfy the requirements of section 404(a)(2) shall not be taken into account.
I.R.C. § 402(e)(4)(D)(iii) Community Property Laws
The provisions of this paragraph shall be applied without regard to community property laws.
I.R.C. § 402(e)(4)(D)(iv) Amounts Subject To Penalty
This paragraph shall not apply to amounts described in subparagraph (A) of section 72(m)(5) to the extent that section 72(m)(5) applies to such amounts.
I.R.C. § 402(e)(4)(D)(v) Balance To Credit Of Employee Not To Include Amounts Payable Under Qualified Domestic Relations Order
For purposes of this paragraph, the balance to the credit of an employee shall not include any amount payable to an alternate payee under a qualified domestic relations order (within the meaning of section 414(p)).
I.R.C. § 402(e)(4)(D)(vi) Transfers To Cost-Of-Living Arrangement Not Treated As Distribution
For purposes of this paragraph, the balance to the credit of an employee under a defined contribution plan shall not include any amount transferred from such defined contribution plan to a qualified cost-of-living arrangement (within the meaning of section 415(k)(2)) under a defined benefit plan.
I.R.C. § 402(e)(4)(D)(vii) Lump-Sum Distributions Of Alternate Payees
If any distribution or payment of the balance to the credit of an employee would be treated as a lump-sum distribution, then, for purposes of this paragraph, the payment under a qualified domestic relations order (within the meaning of section 414(p)) of the balance to the credit of an alternate payee who is the spouse or former spouse of the employee shall be treated as a lump-sum distribution. For purposes of this clause, the balance to the credit of the alternate payee shall not include any amount payable to the employee.
I.R.C. § 402(e)(4)(E) Definitions Relating To Securities
For purposes of this paragraph—
I.R.C. § 402(e)(4)(E)(i) Securities
The term “securities” means only shares of stock and bonds or debentures issued by a corporation with interest coupons or in registered form.
I.R.C. § 402(e)(4)(E)(ii) Securities Of The Employer
The term “securities of the employer corporation” includes securities of a parent or subsidiary corporation (as defined in subsections (e) and (f) of section 424) of the employer corporation.
I.R.C. § 402(e)(5)
[Struck by P.L. 104-188, Sec. 1401(b)(13).]
I.R.C. § 402(e)(6) Direct Trustee-To-Trustee Transfers
Any amount transferred in a direct trustee-to-trustee transfer in accordance with section 401(a)(31) shall not be includible in gross income for the taxable year of such transfer.
I.R.C. § 402(f) Written Explanation To Recipients Of Distributions Eligible For Rollover Treatment
I.R.C. § 402(f)(1) In General
The plan administrator of any plan shall, within a reasonable period of time before making an eligible rollover distribution, provide a written explanation to the recipient—
I.R.C. § 402(f)(1)(A)
of the provisions under which the recipient may have the distribution directly transferred to an eligible retirement plan and that the automatic distribution by direct transfer applies to certain distributions in accordance with section 401(a)(31)(B),
I.R.C. § 402(f)(1)(B)
of the provision which requires the withholding of tax on the distribution if it is not directly transferred to an eligible retirement plan,
I.R.C. § 402(f)(1)(C)
of the provisions under which the distribution will not be subject to tax if transferred to an eligible retirement plan within 60 days after the date on which the recipient received the distribution,
I.R.C. § 402(f)(1)(D)
if applicable, of the provisions of subsections (d) and (e) of this section, and
I.R.C. § 402(f)(1)(E)
of the provisions under which distributions from the eligible retirement plan receiving the distribution may be subject to restrictions and tax consequences which are different from those applicable to distributions from the plan making such distribution.
I.R.C. § 402(f)(2) Definitions
For purposes of this subsection—
I.R.C. § 402(f)(2)(A) Eligible Rollover Distribution
The term “eligible rollover distribution” has the same meaning as when used in subsection (c) of this section, paragraph (4) of section 403(a), subparagraph (A) of section 403(b)(8), or subparagraph (A) of section 457(e)(16). Such term shall include any distribution to a designated beneficiary which would be treated as an eligible rollover distribution by reason of subsection (c)(11), or section 403(a)(4)(B), 403(b)(8)(B), or 457(e)(16)(B), if the requirements of subsection (c)(11) were satisfied.
I.R.C. § 402(f)(2)(B) Eligible Retirement Plan
The term “eligible retirement plan” has the meaning given such term by subsection (c)(8)(B).
I.R.C. § 402(g) Limitation On Exclusion For Elective Deferrals
I.R.C. § 402(g)(1) In General
I.R.C. § 402(g)(1)(A) Limitation
Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual's gross income to the extent the amount of such deferrals for the taxable year exceeds the applicable dollar amount. The preceding sentence shall not apply to the portion of such excess as does not exceed the designated Roth contributions of the individual for the taxable year.
I.R.C. § 402(g)(1)(B) Applicable Dollar Amount
For purposes of subparagraph (A), the applicable dollar amount is $15,000.
I.R.C. § 402(g)(1)(C) Catch-Up Contributions
In addition to subparagraph (A), in the case of an eligible participant (as defined in section 414(v)), gross income shall not include elective deferrals in excess of the applicable dollar amount under subparagraph (B) to the extent that the amount of such elective deferrals does not exceed the applicable dollar amount under section 414(v)(2)(B)(i) for the taxable year (without regard to the treatment of the elective deferrals by an applicable employer plan under section 414(v)).
I.R.C. § 402(g)(2) Distribution Of Excess Deferrals
I.R.C. § 402(g)(2)(A) In General
If any amount (hereinafter in this paragraph referred to as “excess deferrals”) is included in the gross income of an individual under paragraph (1) (or would be included but for the last sentence thereof) for any taxable year—
I.R.C. § 402(g)(2)(A)(i)
not later than the 1st March 1 following the close of the taxable year, the individual may allocate the amount of such excess deferrals among the plans under which the deferrals were made and may notify each such plan of the portion allocated to it, and
I.R.C. § 402(g)(2)(A)(ii)
not later than the 1st April 15 following the close of the taxable year, each such plan may distribute to the individual the amount allocated to it under clause (i) (and any income allocable to such amount through the end of such taxable year).
The distribution described in clause (ii) may be made notwithstanding any other provision of law.
I.R.C. § 402(g)(2)(B) Treatment Of Distribution Under Section 401(k)
Except to the extent provided under rules prescribed by the Secretary, notwithstanding the distribution of any portion of an excess deferral from a plan under subparagraph (A)(ii), such portion shall, for purposes of applying section 401(k)(3)(A)(ii), be treated as an employer contribution.
I.R.C. § 402(g)(2)(C) Taxation Of Distribution
In the case of a distribution to which subparagraph (A) applies—
I.R.C. § 402(g)(2)(C)(i)
except as provided in clause (ii), such distribution shall not be included in gross income, and
I.R.C. § 402(g)(2)(C)(ii)
any income on the excess deferral shall, for purposes of this chapter, be treated as earned and received in the taxable year in which such income is distributed.
No tax shall be imposed under section 72(t) on any distribution described in the preceding sentence.
I.R.C. § 402(g)(2)(D) Partial Distributions
If a plan distributes only a portion of any excess deferral and income allocable thereto, such portion shall be treated as having been distributed ratably from the excess deferral and the income.
I.R.C. § 402(g)(3) Elective Deferrals
For purposes of this subsection, the term “elective deferrals” means, with respect to any taxable year, the sum of—
I.R.C. § 402(g)(3)(A)
any employer contribution under a qualified cash or deferred arrangement (as defined in section 401(k)) to the extent not includible in gross income for the taxable year under subsection (e)(3) (determined without regard to this subsection),
I.R.C. § 402(g)(3)(B)
any employer contribution to the extent not includible in gross income for the taxable year under subsection (h)(1)(B) (determined without regard to this subsection),
I.R.C. § 402(g)(3)(C)
any employer contribution to purchase an annuity contract under section 403(b) under a salary reduction agreement (within the meaning of section 3121(a)(5)(D)), and
I.R.C. § 402(g)(3)(D)
any elective employer contribution under section 408(p)(2)(A)(i).
An employer contribution shall not be treated as an elective deferral described in subparagraph (C) if under the salary reduction agreement such contribution is made pursuant to a one-time irrevocable election made by the employee at the time of initial eligibility to participate in the agreement or is made pursuant to a similar arrangement involving a one-time irrevocable election specified in regulations.
I.R.C. § 402(g)(4) Cost-Of-Living Adjustment
In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under paragraph (1)(B) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.
I.R.C. § 402(g)(5) Disregard Of Community Property Laws
This subsection shall be applied without regard to community property laws.
I.R.C. § 402(g)(6) Coordination With Section 72
For purposes of applying section 72, any amount includible in gross income for any taxable year under this subsection but which is not distributed from the plan during such taxable year shall not be treated as investment in the contract.
I.R.C. § 402(g)(7) Special Rule For Certain Organizations
I.R.C. § 402(g)(7)(A) In General
In the case of a qualified employee of a qualified organization, with respect to employer contributions described in paragraph (3)(C) made by such organization, the limitation of paragraph (1) for any taxable year shall be increased by whichever of the following is the least:
I.R.C. § 402(g)(7)(A)(ii)
$15,000 reduced by the sum of—
I.R.C. § 402(g)(7)(A)(ii)(I)
the amounts not included in gross income for prior taxable years by reason of this paragraph, plus
I.R.C. § 402(g)(7)(A)(ii)(II)
the aggregate amount of designated Roth contributions (as defined in section 402A(c)) permitted for prior taxable years by reason of this paragraph, or
I.R.C. § 402(g)(7)(A)(iii)
the excess of $5,000 multiplied by the number of years of service of the employee with the qualified organization over the employer contributions described in paragraph (3) made by the organization on behalf of such employee for prior taxable years (determined in the manner prescribed by the Secretary).
I.R.C. § 402(g)(7)(B) Qualified Organization
For purposes of this paragraph, the term “qualified organization” means any educational organization, hospital, home health service agency, health and welfare service agency, church, or convention or association of churches. Such term includes any organization described in section 414(e)(3)(B)(ii). Terms used in this subparagraph shall have the same meaning as when used in section 415(c)(4) (as in effect before the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001).
I.R.C. § 402(g)(7)(C) Qualified Employee
For purposes of this paragraph, the term “qualified employee” means any employee who has completed 15 years of service with the qualified organization.
I.R.C. § 402(g)(7)(D) Years Of Service
For purposes of this paragraph, the term “years of service” has the meaning given such term by section 403(b).
I.R.C. § 402(g)(8) Matching Contributions On Behalf Of Self-Employed Individuals Not Treated As Elective Employer Contributions
Except as provided in section 401(k)(3)(D)(ii), any matching contribution described in section 401(m)(4)(A) which is made on behalf of a self-employed individual (as defined in section 401(c)) shall not be treated as an elective employer contribution under a qualified cash or deferred arrangement (as defined in section 401(k)) for purposes of this title.
I.R.C. § 402(h) Special Rules For Simplified Employee Pensions
For purposes of this chapter—
I.R.C. § 402(h)(1) In General
Except as provided in paragraph (2), contributions made by an employer on behalf of an employee to an individual retirement plan pursuant to a simplified employee pension (as defined in section 408(k))—
I.R.C. § 402(h)(1)(A)
shall not be treated as distributed or made available to the employee or as contributions made by the employee, and
I.R.C. § 402(h)(1)(B)
if such contributions are made pursuant to an arrangement under section 408(k)(6) under which an employee may elect to have the employer make contributions to the simplified employee pension on behalf of the employee, shall not be treated as distributed or made available or as contributions made by the employee merely because the simplified employee pension includes provisions for such election.
I.R.C. § 402(h)(2) Limitations On Employer Contributions
Contributions made by an employer to a simplified employee pension with respect to an employee for any year shall be treated as distributed or made available to such employee and as contributions made by the employee to the extent such contributions exceed the lesser of—
I.R.C. § 402(h)(2)(A)
25 percent of the compensation (within the meaning of section 414(s)) from such employer includible in the employee's gross income for the year (determined without regard to the employer contributions to the simplified employee pension), or
I.R.C. § 402(h)(2)(B)
the limitation in effect under section 415(c)(1)(A), reduced in the case of any highly compensated employee (within the meaning of section 414(q)) by the amount taken into account with respect to such employee under section 408(k)(3)(D).
I.R.C. § 402(h)(3) Distributions
Any amount paid or distributed out of an individual retirement plan pursuant to a simplified employee pension shall be included in gross income by the payee or distributee, as the case may be, in accordance with the provisions of section 408(d).
I.R.C. § 402(i) Treatment Of Self-Employed Individuals
For purposes of this section, except as otherwise provided in subsection (e)(4)(D)(i), the term “employee” includes a self-employed individual (as defined in section 401(c)(1)(B)) and the employer of such individual shall be the person treated as his employer under section 401(c)(4).
I.R.C. § 402(j) Effect Of Disposition Of Stock By Plan On Net Unrealized Appreciation
I.R.C. § 402(j)(1) In General
For purposes of subsection (e)(4), in the case of any transaction to which this subsection applies, the determination of net unrealized appreciation shall be made without regard to such transaction.
I.R.C. § 402(j)(2) Transaction To Which Subsection Applies
This subsection shall apply to any transaction in which—
I.R.C. § 402(j)(2)(A)
the plan trustee exchanges the plan's securities of the employer corporation for other such securities, or
I.R.C. § 402(j)(2)(B)
the plan trustee disposes of securities of the employer corporation and uses the proceeds of such disposition to acquire securities of the employer corporation within 90 days (or such longer period as the Secretary may prescribe), except that this subparagraph shall not apply to any employee with respect to whom a distribution of money was made during the period after such disposition and before such acquisition.
I.R.C. § 402(k) Treatment Of Simple Retirement Accounts
Rules similar to the rules of paragraphs (1) and (3) of subsection (h) shall apply to contributions and distributions with respect to a simple retirement account under section 408(p).
I.R.C. § 402(l) Distributions From Governmental Plans For Health And Long-Term Care Insurance
I.R.C. § 402(l)(1) In General
In the case of an employee who is an eligible retired public safety officer who makes the election described in paragraph (6) with respect to any taxable year of such employee, gross income of such employee for such taxable year does not include any distribution from an eligible retirement plan maintained by the employer described in paragraph (4)(B) to the extent that the aggregate amount of such distributions does not exceed the amount paid by such employee for qualified health insurance premiums for such taxable year.
I.R.C. § 402(l)(2) Limitation
The amount which may be excluded from gross income for the taxable year by reason of paragraph (1) shall not exceed $3,000.
I.R.C. § 402(l)(3) Distributions Must Otherwise Be Includible
I.R.C. § 402(l)(3)(A) In General
An amount shall be treated as a distribution for purposes of paragraph (1) only to the extent that such amount would be includible in gross income without regard to paragraph (1).
I.R.C. § 402(l)(3)(B) Application Of Section 72
Notwithstanding section 72, in determining the extent to which an amount is treated as a distribution for purposes of subparagraph (A), the aggregate amounts distributed from an eligible retirement plan in a taxable year (up to the amount excluded under paragraph (1)) shall be treated as includible in gross income (without regard to subparagraph (A)) to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts to the credit of the eligible public safety officer in all eligible retirement plans maintained by the employer described in paragraph (4)(B) were distributed during such taxable year and all such plans were treated as 1 contract for purposes of determining under section 72 the aggregate amount which would have been so includible. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.
I.R.C. § 402(l)(4) Definitions
For purposes of this subsection—
I.R.C. § 402(l)(4)(A) Eligible Retirement Plan
For purposes of paragraph (1), the term “eligible retirement plan” means a governmental plan (within the meaning of section 414(d)) which is described in clause (iii), (iv), (v), or (vi) of subsection (c)(8)(B).
I.R.C. § 402(l)(4)(B) Eligible Retired Public Safety Officer
The term “eligible retired public safety officer” means an individual who, by reason of disability or attainment of normal retirement age, is separated from service as a public safety officer with the employer who maintains the eligible retirement plan from which distributions subject to paragraph (1) are made.
I.R.C. § 402(l)(4)(C) Public Safety Officer
The term “public safety officer” shall have the same meaning given such term by section 1204(9)(A) of the Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3796b(9)(A)), as in effect immediately before the enactment of the National Defense Authorization Act for Fiscal Year 2013.
I.R.C. § 402(l)(4)(D) Qualified Health Insurance Premiums
The term “qualified health insurance premiums” means premiums for coverage for the eligible retired public safety officer, his spouse, and dependents (as defined in section 152), by an accident or health plan or qualified long-term care insurance contract (as defined in section 7702B(b)).
I.R.C. § 402(l)(5) Special Rules
For purposes of this subsection—
I.R.C. § 402(l)(5)(A) Direct Payment To Insurer Required
Paragraph (1) shall only apply to a distribution if payment of the premiums is made directly to the provider of the accident or health plan or qualified long-term care insurance contract by deduction from a distribution from the eligible retirement plan.
I.R.C. § 402(l)(5)(B) Related Plans Treated As 1
All eligible retirement plans of an employer shall be treated as a single plan.
I.R.C. § 402(l)(6) Election Described
I.R.C. § 402(l)(6)(A) In General
For purposes of paragraph (1), an election is described in this paragraph if the election is made by an employee after separation from service with respect to amounts not distributed from an eligible retirement plan to have amounts from such plan distributed in order to pay for qualified health insurance premiums.
I.R.C. § 402(l)(6)(B) Special Rule
A plan shall not be treated as violating the requirements of section 401, or as engaging in a prohibited transaction for purposes of section 503(b), merely because it provides for an election with respect to amounts that are otherwise distributable under the plan or merely because of a distribution made pursuant to an election described in subparagraph (A).
I.R.C. § 402(l)(7) Coordination With Medical Expense Deduction
The amounts excluded from gross income under paragraph (1) shall not be taken into account under section 213.
I.R.C. § 402(l)(8) Coordination With Deduction For Health Insurance Costs Of Self-Employed Individuals
The amounts excluded from gross income under paragraph (1) shall not be taken into account under section 162(l).
(Added by Aug. 16, 1954, ch. 736, 68A Stat. 135; amended by Apr. 22, 1960, Pub. L. 86-437, Sec. 1, 2(a), 74 Stat. 79; Oct. 10, 1962, Pub. L. 87-792, Sec. 4(c), 76 Stat. 825; Feb. 26, 1964, Pub. L. 88-272, title II, Sec. 221(c)(1), 232(e)(1)-(3), 78 Stat. 75, 111; Dec. 30, 1969, Pub. L. 91-172, title III, Sec. 321(b)(1), title V, Sec. 515(a)(1), 83 Stat. 590, 643; Sept. 2, 1974, Pub. L. 93-406, title II, Sec. 2002(g)(5), 2005(a), (b)(1), (c)(1), (2), 88 Stat. 968, 987, 990, 991: Apr. 15, 1976, Pub. L. 94-267, Sec. 1(a), 90 Stat. 365; Oct. 4, 1976, Pub. L. 94-455, title XIV, Sec. 1402(b)(1)(C), (2), title XV, Sec. 1512(a), title XIX, Sec. 1901(a)(57)(A)-(C)(i), 1906(b)(13)(A), 90 Stat. 1731, 1732, 1742, 1773, 1774, 1834; May 23, 1977, Pub. L. 95-30, title I, Sec. 102(b)(4), 91 Stat. 137; Oct. 14, 1978, Pub. L. 95-458, Sec. 4(a), (c), 92 Stat. 1257, 1259; Nov. 6, 1978, Pub. L. 95-600, title I, Sec. 101(d)(1), 135(b), 157(f)(1), (g)(1), (h)(1), 92 Stat. 2770, 2787, 2806-2808; Apr. 1, 1980, Pub. L. 96-222, title I, Sec. 101(a)(14)(C), (E)(i), 94 Stat. 204, 205; Dec. 28, 1980, Pub. L. 96-608, Sec. 2(a), 94 Stat. 3551; Aug. 13, 1981, Pub. L. 97-34, title III, Sec. 311(b)(2), (3)(A), (c), 314(c)(1), 95 Stat. 280, 286; Jan. 12, 1983, Pub. L. 97-448, title I, Sec. 101(b), 103(c)(7), (8)(A), (12)(D), 96 Stat. 2366, 2376, 2377; July 18, 1984, Pub. L. 98-369, div. A, title IV, Sec. 491(c)(2), (d)(9)-(11), title V, Sec. 522(a)(1), (b)-(d)(8), title VII, Sec. 713(c)(3), title X, Sec. 1001(b)(3), 98 Stat. 848, 849, 868-870, 957, 1011; Aug. 23, 1984, Pub. L. 98-397, title II, Sec. 204(c)(1), (3), (4), 207(a), 98 Stat. 1448, 1449; Apr. 7, 1986, Pub. L. 99-272, title XI, Sec. 11012(c), 100 Stat. 260; Oct. 22, 1986, Pub. L. 99-514, title I, Sec. 104(b)(5), title XI, Sec. 1105(a), 1106(c)(2), 1108(b), 1112(c), 1121(c)(1), 1122(a), (b)(1)(A), (2), (e)(1), (2)(A), (g), title XVIII, Sec. 1852(a)(5)(A), (b)(1)-(7), (c)(5), 1854(f)(2), 1875(c)(1)(A), 1898(a)(2), (3), (c)(1)(A), (7)(A)(i), (e), 100 Stat. 2105, 2417, 2423, 2432, 2444, 2465, 2466, 2469, 2470, 2865-2867, 2881, 2894, 2942, 2943, 2951, 2954, 2955; Nov. 10, 1988, Pub. L. 100-647, title I, Sec. 1011(c)(1)-(6)(B), (11), (h)(4), 1011A(a)(1), (b)(4)(A)-(D), (5)-(8), (10), (c)(9), 1018(t)(8)(A), (C), (u)(1), (6), (7), title VI, Sec. 6068(a), 102 Stat. 3457-3459, 3464, 3472-3474, 3476, 3589, 3590, 3703; Dec. 19, 1989, Pub. L. 101-239, title VII, Sec. 7811(g)(2), (i)(13), 103 Stat. 2409, 2411; Nov. 5, 1990, Pub. L. 101-508, title XI, Sec. 11801(c)(9)(I), 104 Stat. 1388-526; July 3, 1992, Pub. L. 102-318, title V, Sec. 521, 522; Dec. 8, 1994, Pub. L. 103-465, title VII, Sec. 732(c); Aug. 20, 1996, Pub. L. 104-188, title I, Sec. 1401, 1421(b), 1450(a), 1704(t)(68), 110 Stat. 1755; Pub. L. 105-34, title XV, Sec. 1501(a), 1509, Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title VI, Sec. 6005(c)(2)(A), July 22, 1998, 112 Stat 685; Pub. L. 107-16, title VI, Sec. 611, 617, 632, 636, 641, 643, 644, 657, 666, June 7, 2001, 115 Stat. 38; Pub. L. 107-147, title IV, Sec. 411, Mar. 9, 2002, 116 Stat. 21; Pub. L. 109-135, title IV, Sec. 407(a), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 109-280, title VIII, Sec. 822(a), 829(a)(1), 845(a), Aug. 17, 2006, 120 Stat. 780; Pub. L. 110-172, Sec. 8(a)(1), Dec. 29, 2007, 121 Stat. 2473; Pub. L. 110-458, title I, Sec. 108(f), (j), 109(b)(3), title II, Sec. 201(b), Dec. 23, 2008, 122 Stat. 5092; Pub. L. 112-239, Sec. 1086(b)(3)(A), Jan. 2, 2013; Pub. L. 113-295, Div. A, title II, Sec. 221(a)(57)(A), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 115-97, title I, Sec. 13613, Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(73), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 — Subsec. (i). Pub. L. 115-141, Div. U, Sec. 401(a)(73), amended subsec. (i) by substituting ‘‘subsection (e)(4)(D)(i)’’ for ‘‘subparagraph (A) of subsection (d)(4)’’.
2017 — Subsec. (c)(3). Pub. L. 115-97, Sec. 13613(b)(1), amended the heading of par. (3) by substituting “TIME LIMIT ON TRANSFERS’’ for “TRANSFER MUST BE MADE WITHIN 60 DAYS OF RECEIPT”.
Subsec. (c)(3)(A). Pub. L. 115-97, Sec. 13613(b)(2), amended subpar. (A) by substituting “subparagraphs (B) and (C)” for “subparagraph (B)”.
Subsec. (c)(3)(C). Pub. L. 115-97, Sec. 13613(a), amended par. (3) by adding subpar. (C).
2014 — Subsec. (g)(1)(B). Pub. L. 113-295, Div. A, Sec. 221(a)(57)(A), amended subpar. (B) by substituting “is $15,000.” for “shall be the amount determined in accordance with the following table:
 

For taxable years beginning     The applicable dollar amount:
 in calendar year:
 
    2002                              $11,000
    2003                              $12,000
    2004                              $13,000
    2005                              $14,000
    2006 or thereafter                $15,000.”
2013 - Subsec. (l)(4)(C). Pub. L. 112-239, Sec. 1086(b)(3)(A), amended subpar. (C) by inserting “, as in effect immediately before the enactment of the National Defense Authorization Act for Fiscal Year 2013” before the period at the end.
2008 - Subsec. (c)(4). Pub. L. 110-458, Sec. 201(b), amended par. (4) by adding a flush sentence at the end.
Subsec. (c)(11)(A). Pub. L. 110-458, Sec. 108(f)(1)(A), amended subpar. (A) by inserting “described in paragraph (8)(B)(iii)” after “eligible retirement plan”.
Subsec. (c)(11)(A)(i). Pub. L. 110-458, Sec. 108(f)(2)(B), amended clause (i) by striking “for purposes of this subsection”.
Subsec. (c)(11)(B). Pub. L. 110-458, Sec. 108(f)(1)(B), amended subpar. (B) by striking “trust” before “designated beneficiary”.
Subsec. (f)(2)(A). Pub. L. 110-458, Sec. 108(f)(2)(A), amended subpar. (A) by adding the sentence at the end.
Subsec. (g)(2)(A)(ii). Pub. L. 110-458, Sec. 109(b)(3), amended clause (ii) by inserting “through the end of such taxable year” after “such amount”.
Subsec. (l)(1). Pub. L. 110-458, Sec. 108(j)(1)(A), amended par. (1) by inserting “maintained by the employer described in paragraph (4)(B)” after “an eligible retirement plan” and by striking “of the employee, his spouse, or dependents (as defined in section 152)”.
Subsec. (l)(3)(B). Pub. L. 110-458, Sec. 108(j)(2), amended subpar. (B) by substituting “all amounts to the credit of the eligible public safety officer in all eligible retirement plans maintained by the employer described in paragraph (4)(B) were distributed during such taxable year and all such plans were treated as 1 contract for purposes of determining under section 72 the aggregate amount which would have been so includible” for “all amounts distributed from all eligible retirement plans were treated as 1 contract for purposes of determining the inclusion of such distribution under section 72”.
Subsec. (l)(4)(D). Pub. L. 110-458, Sec. 108(j)(1)(B), amended subpar. (D) by inserting “(as defined in section 152)” after “dependents” and by substituting “health plan” for “health insurance plan”.
Subsec. (l)(5)(A). Pub. L. 110-458, Sec. 108(j)(1)(C), amended subpar. (A) by substituting “health plan” for “health insurance plan”.
2007 - Subsec. (g)(7)(A)(ii)(II). Pub. L. 110-172, Sec. 8(a)(1), amended subclause (II) by substituting “permitted for prior taxable years by reason of this paragraph” for “for prior taxable years”.
2006 - Subsec. (c)(2)(A). Pub. L. 109-280, Sec. 822(a), amended subpar. (A) by substituting “or to an annuity contract described in section 403(b) and such trust or contract provides for separate accounting” for “which is part of a plan which is a defined contribution plan and which agrees to separately account” and by inserting “(and earnings thereon)” after “so transferred”.
Subsec. (c)(11). Pub. L. 109-280, Sec. 829(a)(1), added par. (11).
Subsec. (l). Pub. L. 109-280, Sec. 845(a), added subsec. (l).
2005 - Subsec. (g)(1)(A). Pub. L. 109-135, Sec. 407(a)(2), amended subpar. (A) by inserting “to” after “shall not apply”.
Subsec. (g)(7)(A)(ii). Pub. L. 109-135, Sec. 407(a)(1), amended clause (ii). Before amendment, it read as follows:
“(ii) $15,000 reduced by amounts not included in gross income for prior taxable years by reason of this paragraph, or”.
2002 - Subsec. (c)(2). Pub. L. 107-147, Sec. 411(q)(2), amended par. (2) by adding the flush sentence at the end.
Subsec. (g)(1)(C). Pub. L. 107-147, Sec. 411(o)(1), added subpar. (C).
Subsec. (g)(7)(B). Pub. L. 107-147, Sec. 411(p)(6), amended subpar. (B) by substituting “2001)” for “2001”.
Subsec. (h)(2)(A). Pub. L. 107-147, Sec. 411(l)(3), amended subpar. (A) by substituting “25 percent” for “15 percent”.
2001 - Subsec. (c)(2). Pub. L. 107-16, Sec. 643(a), amended par. (2) by adding at the end “The preceding sentence shall not apply” and all that follows.
Subsec. (c)(3). Pub. L. 107-16, Sec. 644(a), amended par. (3). Before amendment it read as follows:
“(3) TRANSFER MUST BE MADE WITHIN 60 DAYS OF RECEIPT. --Paragraph (1) shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed.”
Subsec. (c)(4)(C). Pub. L. 107-16, Sec. 636(b)(1), amended subpar. (C). Before amendment it read as follows:
“(C) any hardship distribution described in section 401(k)(2)(B)(i)(IV).”
Subsec. (c)(8)(B). Pub. L. 107-16, Sec. 617(c), amended subpar. (B) by adding the sentence at the end.
Subsec. (c)(8)(B)(iii)-(v). Pub. L. 107-16, Sec. 641(a)(2)(A), amended clause (iii) by striking “and” at the end; amended clause (iv) by substituting “, and” for “.”; and added clause (v).
Subsec. (c)(8)(B)(iv)-(vi). Pub. L. 107-16, Sec. 641(b)(2), amended clause (iv) by striking “and” at the end; amended clause (v) by substituting “, and” for “.”; and added clause (vi).
Subsec. (c)(9). Pub. L. 107-16, Sec. 641(d), amended par. (9) by striking “; except that a trust or plan described in clause (iii) or (iv) of paragraph (8)(B) shall not be treated as an eligible retirement plan with respect to such distribution.” at the end.
Subsec. (c)(10). Pub. L. 107-16, Sec. 641(a)(2)(B), added par. (10).
Subsec. (f)(1). Pub. L. 107-16, Sec. 641(e)(5), amended par. (1) by striking “from an eligible retirement plan” after “an eligible rollover distribution”.
Subsec. (f)(1)(A). Pub. L. 107-16, Sec. 641(e)(6), amended subpar. (A) by substituting “an eligible retirement plan" for “another eligible retirement plan”.
Subsec. (f)(1)(A). Pub. L. 107-16, Sec. 657(b), amended subpar. (A) by inserting before the comma at the end “and that the automatic distribution by direct transfer applies to certain distributions in accordance with section 401(a)(31)(B)”.
Subsec. (f)(1)(B). Pub. L. 107-16, Sec. 641(e)(6), amended subpar. (B) by substituting “an eligible retirement plan" for “another eligible retirement plan”.
Subsec. (f)(1)(C)-(E). Pub. L. 107-16, Sec. 641(c), amended subpar. (C) by striking “and” at the end; amended subpar. (D) by substituting “, and” for “.”; and added subpar. (E).
Subsec. (f)(2)(A). Pub. L. 107-16, Sec. 641(e)(4), amended subpar. (A) by substituting “, paragraph (4) of section 403(a), subparagraph (A) of section 403(b)(8), or subparagraph (A) of section 457(e)(16)” for “or paragraph (4) of section 403(a)”.
Subsec. (g)(1). Pub. L. 107-16, Sec. 611(d)(1), amended par. (1). Before amendment it read as follows:
“(1) In general
“Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual's gross income to the extent the amount of such deferrals for the taxable year exceeds $7,000.”
Subsec. (g)(1)(A). Pub. L. 107-16, Sec. 617(b)(1), amended subpar. (A) by adding the sentence at the end.
Subsec. (g)(2)(A). Pub. L. 107-16, Sec. 617(b)(2), amended subpar. (A) by inserting “(or would be included but for the last sentence thereof)” after “paragraph (1)”.
Subsec. (g)(4). Pub. L. 107-16, Sec. 611(d)(3)(A), struck par. (4).
Subsec. (g)(5). Pub. L. 107-16, Sec. 611(d)(2), amended par. (5). Before amendment it read as follows:
“(5) Cost-of-living adjustment
“The Secretary shall adjust the $7,000 amount under paragraph (1) at the same time and in the same manner as under section 415(d); except that any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.”
Subsec. (g)(5)-(9). Pub. L. 107-16, Sec. 611(d)(3)(A), redesignated par. (5) - (9) as (4) - (8), respectively.
Subsec. (g)(7)(B). Pub. L. 107-16, Sec. 632(a)(3)(G), amended par. (7)(B), as redesignated, by inserting “(as in effect before the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001” at the end.
1998 - Subsec. (c)(4). Pub. L. 105-206, Sec. 6005(c)(2)(A), amended par. (4) by striking “and” at the end of subpar. (A), by substituting “, and” for “.” at the end of subpar. (B), and by adding subpar. (C).
1997 - Subsec. (g)(9). Pub. L. 105-34, Sec. 1501(a), added par. (9).
1996 - Subsec. (c)(10). Pub. L. 104-188, Sec. 1401(b)(2), struck par. (10), generally effective for taxable years beginning after December 31, 1999. Before being struck, it read as follows:
“(10) DENIAL OF AVERAGING FOR SUBSEQUENT DISTRIBUTIONS. -- If paragraph (1) applies to any distribution paid to any employee, paragraphs (1 and (3) of subsection (d) shall not apply to any distribution (paid after such distribution) of the balance to the credit of the employee under the plan under which the preceding distribution was made (or under any other plan which, under subsection (d)(4)(C), would be aggregated with such plan).”
Subsec. (d). Pub. L. 104-188, Sec. 1401(a), amended subsec. (d), generally effective for taxable years beginning after December 31, 1999. Before amendment, it read as follows:
“(d) TAX ON LUMP SUM DISTRIBUTIONS. --
“(1) IMPOSITION OF SEPARATE TAX ON LUMP SUM DISTRIBUTIONS. --
“(A) SEPARATE TAX. -- There is hereby imposed a tax (in the amount determined under subparagraph (B)) on a lump sum distribution.
“(B) AMOUNT OF TAX. -- The amount of tax imposed by subparagraph (A) for any taxable year is an amount equal to 5 times the tax which would be imposed by subsection (c) of section 1 if the recipient were an individual referred to in such subsection and the taxable income were an amount equal to 1/5 of the excess of --
“(i) the total taxable amount of the lump sum distribution for the taxable year, over
“(ii) the minimum distribution allowance.
“(C) MINIMUM DISTRIBUTION ALLOWANCE. -- For purposes of this paragraph, the minimum distribution allowance for any taxable year is an amount equal to --
“(i) the lesser of $10,000 or one-half of the total taxable amount of the lump sum distribution for the taxable year, reduced (but not below zero) by
“(ii) 20 percent of the amount (if any) by which such total taxable amount exceeds $20,000.
“(D) LIABILITY FOR TAX. --
“The recipient shall be liable for the tax imposed by this paragraph.
“(2) DISTRIBUTIONS OF ANNUITY CONTRACTS. --
“(A) IN GENERAL. -- In the case of any recipient of a lump sum distribution for any taxable year, if the distribution (or any part thereof) is an annuity contract, the total taxable amount of the distribution shall be aggregated for purposes of computing the tax imposed by paragraph (1)(A), except that the amount of tax so computed shall be reduced (but not below zero) by that portion of the tax on the aggregate total taxable amount which is attributable to annuity contracts.
“(B) BENEFICIARIES. -- For purposes of this paragraph, a beneficiary of a trust to which a lump sum distribution is made shall be treated as the recipient of such distribution if the beneficiary is an employee (including an employee within the meaning of section 401(c)(1)) with respect to the plan under which the distribution is made or if the beneficiary is treated as the owner of such trust for purposes of subpart E of part I of subchapter J.
“(C) ANNUITY CONTRACTS. -- For purposes of this paragraph, in the case of the distribution of an annuity contract, the taxable amount of such distribution shall be deemed to be the current actuarial value of the contract, determined on the date of such distribution.
“(D) TRUSTS. -- In the case of a lump sum distribution with respect to any individual which is made only to 2 or more trusts, the tax imposed by paragraph (1)(A) shall be computed as if such distribution was made to a single trust, but the liability for such tax shall be apportioned among such trusts according to the relative amounts received by each.
“(E) REGULATIONS. -- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph.
“(3) ALLOWANCE OF DEDUCTION. -- The total taxable amount of a lump sum distribution for any taxable year shall be allowed as a deduction from gross income for such taxable year, but only to the extent included in the taxpayer's gross income for such taxable year.
“(4) DEFINITIONS AND SPECIAL RULES. --
“(A) LUMP SUM DISTRIBUTION. -- For purposes of this section and section 403, the term ‘lump sum distribution’ means the distribution or payment within 1 taxable year of the recipient of the balance to the credit of an employee which becomes payable to the recipient --
“(i) on account of the employee's death,
“(ii) after the employee attains age 59 1/2,
“(iii) on account of the employee's separation from the service, or
“(iv) after the employee has become disabled (within the meaning of section 72(m)(7)), from a trust which forms a part of a plan described in section 401(a) and which is exempt from tax under section 501 or from a plan described in section 403(a). Clause (iii) of this subparagraph shall be applied only with respect to an 401(c)(1), and clause (iv) shall be applied only with respect to an employee within the meaning of section 401(c)(1). A distribution of an annuity contract from a trust or annuity plan referred to in the first sentence of this subparagraph shall be treated as a lump sum distribution. For purposes of this subparagraph, a distribution to 2 or more trusts shall be treated as a distribution to 1 recipient. For purposes of this subsection, the balance to the credit of the employee does not include the accumulated deductible employee contributions under the plan (within the meaning of section 72(o)(5)).
“(B) AVERAGING TO APPLY TO 1 LUMP SUM DISTRIBUTION AFTER AGE 59 1/2. -- Paragraph (1) shall apply to a lump sum distribution with respect to an employee under subparagraph (A) only if --
“(i) such amount is received on or after the date on which the employee has attained age 59 1/2, and
“(ii) the taxpayer elects for the taxable year to have all such amounts received during such taxable year so treated. Not more than 1 election may be made under this subparagraph by any taxpayer with respect to any employee. No election may be made under this subparagraph by any taxpayer other than an individual, an estate, or a trust. In the case of a lump sum distribution made with respect to an employee to 2 or more trusts, the election under this subparagraph shall be made by the personal representative of the taxpayer.
“(C) AGGREGATION OF CERTAIN TRUSTS AND PLANS. -- For purposes of determining the balance to the credit of an employee under subparagraph (A) --
“(i) all trusts which are part of a plan shall be treated as a single trust, all pension plans maintained by the employer shall be treated as a single plan, all profit-sharing plans maintained by the employer shall be treated as a single plan, and all stock bonus plans maintained by the employer shall be treated as a single plan, and
“(ii) trusts which are not qualified trusts under section 401(a) and annuity contracts which do not satisfy the requirements of section 404(a)(2) shall not be taken into account.
“(D) TOTAL TAXABLE AMOUNT. -- For purposes of this section and section 403, the term ‘total taxable amount’ means, with respect to a lump sum distribution, the amount of such distribution which exceeds the sum of --
“(i) the amounts considered contributed by the employee (determined by applying section 72(f)), reduced by any amounts previously distributed which were not includible in gross income, and
“(ii) the net unrealized appreciation attributable to that part of the distribution which consists of the securities of the employer corporation so distributed.
“(E) COMMUNITY PROPERTY LAWS. -- The provisions of this subsection, other than paragraph (3), shall be applied without regard to community property laws.
“(F) MINIMUM PERIOD OF SERVICE. -- For purposes of this subsection, no amount distributed to an employee from or under a plan may be treated as a lump sum distribution under subparagraph (A) unless the employee has been a participant in the plan for 5 or more taxable years before the taxable year in which such amounts are distributed.
“(G) AMOUNTS SUBJECT TO PENALTY. -- This subsection shall not apply to amounts described in subparagraph (A) of section 72(m)(5) to the extent that section 72(m)(5) applies to such amounts.
“(H) BALANCE TO CREDIT OF EMPLOYEE NOT TO INCLUDE AMOUNTS PAYABLE UNDER QUALIFIED DOMESTIC RELATIONS ORDER. -- For purpose of this subsection, the balance to the credit of an employee shall not include any amount payable to an alternate payee under a qualified domestic relations order (within the meaning of section 414(p)).
“(I) TRANSFERS TO COST-OF-LIVING ARRANGEMENT NOT TREATED AS DISTRIBUTION. -- For purposes of this subsection, the balance to the credit of an employee under a defined contribution plan shall not include any amount transferred from such defined contribution plan to a qualified cost-of- living arrangement (within the meaning of section 415(k)(2)) under a defined benefit plan.
“(J) LUMP SUM DISTRIBUTIONS OF ALTERNATE PAYEES. -- If any distribution or payment of the balance to the credit of an employee would be treated as a lump sum distribution, then, for purposes of this subsection, the payment under a qualified domestic relations order (within the meaning of section 414(p)) of the balance to the credit of an alternate payee who is the spouse or former spouse of the employee shall be treated as a lump sum distribution. For purposes of this subparagraph, the balance to the credit of the alternate payee shall not include any amount payable to the employee.
“(K) TREATMENT OF PORTION NOT ROLLED OVER. -- If any portion of a lump sum distribution is transferred in a transfer to which subsection (c) applies, paragraphs (1) AND (3) shall not apply with respect to the distribution.
“(L) SECURITIES. -- For purposes of this subsection, the terms ‘securities’ and ‘securities of the employer corporation’ have the respective meanings provided by subsection (e)(4)(E).
“(5) SPECIAL RULE WHERE PORTIONS OF LUMP SUM DISTRIBUTION ATTRIBUTABLE TO ROLLOVER OF BOND PURCHASED UNDER QUALIFIED BOND PURCHASE PLAN. -- If any portion of a lump sum distribution is attributable to a transfer described in section 405(d)(3)(A)(ii) (as in effect before its repeal by the Tax Reform Act of 1984), paragraphs (1) and (3) of this subsection shall not apply to such portion.
“(6) TREATMENT OF POTENTIAL FUTURE VESTING. --
“(A) IN GENERAL. -- For purposes of determining whether any distribution which becomes payable to the recipient on account of the employee's separation from service is a lump sum distribution, the balance to the credit of the employee shall be determined without regard to any increase in vesting which may occur if the employee is reemployed by the employer.
“(B) RECAPTURE IN CERTAIN CASES. -- If --
“(i) an amount is treated as a lump sum distribution by reason of subparagraph (A),
“(ii) special lump sum treatment applies to such distribution,
“(iii) the employee is subsequently reemployed by the employer, and
“(iv) as a result of services performed after being so reemployed, there is an increase in the employee's vesting for benefits accrued before the separation referred to in subparagraph (A), under regulations prescribed by the Secretary, the tax imposed by this chapter for the taxable year (in which the increase in vesting first occurs) shall be increased by the reduction in tax which resulted from the special lump treatment (and any election under paragraph 4(B) shall not be taken into account for purposes of determining whether the employee may make another election under paragraph (4)(B)).
“(C) SPECIAL LUMP SUM TREATMENT. -- For purposes of this paragraph, special lump treatment applies to any distribution if any portion of such distribution is taxed under the subsection by reason of any election under paragraph (4)(B).
“(D) VESTING. -- For purposes of this paragraph, the term ‘vesting’ means the portion of the accrued benefits derived from employer contributions to which the participant has a nonforfeitable right.
“(7) COORDINATION WITH FOREIGN TAX CREDIT LIMITATIONS. -- Subsections (a), (b), and (c) of section 904 shall be applied separately with respect to any lump sum distribution on which tax is imposed under paragraph (1), and the amount of such distribution shall be treated as the taxable income for purposes of such separate application.”
Subsec. (e)(3). Pub. L. 104-188, Sec. 1450(a)(2), inserted “or which is part of a salary reduction agreement under section 403(b)” after “section 401(k)(2))”.
Subsec. (e)(4)(D). Pub. L. 104-188, Sec. 1401(b)(1), amended subpar. (D), generally effective for taxable years beginning after December 31, 1999.
Subsec. (e)(5). Pub. L. 104-188, Sec. 1401(b)(13), struck par. (5), generally effective for taxable years beginning after December 31, 1999. Before being struck, it read as follows:
“(5) TAXABILITY OF BENEFICIARY OF CERTAIN FOREIGN SITUS TRUSTS. -- For purposes of subsections (a), (b), and (c), a stock bonus, pension, or profit-sharing trust which would qualify for exemption from tax under section 501(a) except for the fact that it is a trust created or organized outside the United States shall be treated as if it were a trust exempt from tax under section 501(a).”
Subsec. (g)(3)(A). Pub. L. 104-188, Sec. 1704(t)(68), substituted “subsection (e)(3)” for “subsection (a)(8)”.
Subsec. (g)(3)(D). Pub. L. 104-188, Sec. 1421(b)(9), added subpar. (D).
Subsec. (k). Pub. L. 104-188, Sec. 1421(b)(3), added subsec. (k).
1994 - Subsec. (g)(5). Pub. L. 103-465, Sec. 732(c), amended par. (5) by adding “; except that any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500”, effective generally for years beginning after December 31, 1994.
1992 - Subsec. (a)-(f). Pub. L. 102-318, Sec. 521(a), amended subsec. (a)-(f). Before amendment, they read as follows:
“(a) Taxability of beneficiary of exempt trust
“(1) General rule
“Except as provided in paragraph (4), the amount actually distributed to any distributee by any employees' trust described in section 401(a) which is exempt from tax under section 501(a) shall be taxable to him, in the year in which so distributed, under section 72 (relating to annuities). The amount actually distributed to any distributee shall not include net unrealized appreciation in securities of the employer corporation attributable to the amount contributed by the employee (other than deductible employee contributions within the meaning of section 72(o)(5)). Such net unrealized appreciation and the resulting adjustments to basis of such securities shall be determined in accordance with regulations prescribed by the Secretary.
“[(2) Repealed. Pub. L. 99-514, title XI, 1122(b)(1)(A), Oct. 22, 1986, 100 Stat. 2466]
“(3) Definitions
“For purposes of this subsection--
“(A) The term “securities” means only shares of stock and bonds or debentures issued by a corporation with interest coupons or in registered form.
“(B) The term “securities of the employer corporation” includes securities of a parent or subsidiary corporation (as defined in subsections (e) and (f) of section 424) of the employer corporation.
“(4) Distributions by United States to nonresident aliens
“The amount includible under paragraph (1) of this subsection in the gross income of a nonresident alien individual with respect to a distribution made by the United States in respect of services performed by an employee of the United States shall not exceed an amount which bears the same ratio to the amount includible in gross income without regard to this paragraph as--
“(A) the aggregate basic pay paid by the United States to such employee for such services, reduced by the amount of such basic pay which was not includible in gross income by reason of being from sources without the United States, bears to
“(B) the aggregate basic pay paid by the United States to such employee for such services.
“In the case of distributions under the civil service retirement laws, the term “basic pay” shall have the meaning provided in section 8331(3) of title 5, United States Code.
“(5) Rollover amounts
“(A) General rule
“If--
“(i) any portion of the balance to the credit of an employee in a qualified trust is paid to him,
“(ii) the employee transfers any portion of the property he receives in such distribution to an eligible retirement plan, and
“(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed, then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.
“(B) Maximum amount which may be rolled over
“In the case of any qualified total distribution, the maximum amount transferred to which subparagraph (A) applies shall not exceed the fair market value of all the property the employee receives in the distribution, reduced by the employee contributions (other than accumulated deductible employee contributions within the meaning of section 72(o)(5)). In the case of any partial distribution, the maximum amount transferred to which subparagraph (A) applies shall not exceed the portion of such distribution which is includible in gross income (determined without regard to subparagraph (A)).
“(C) Transfer must be made within 60 days of receipt
Subparagraph (A) shall not apply to any transfer of a distribution made after the 60th day following the day on which the employee received the property distributed.
“(D) Special rules for partial distributions
“(i) Requirements
“Subparagraph (A) shall apply to a partial distribution only if--
“(I) such distribution is payable as provided in clause (i), (iii), or (iv) of subsection (e)(4)(A) (without regard to the second sentence thereof) and is of an amount equal to at least 50 percent of the balance to the credit of the employee in a qualified trust (determined immediately before such distribution and without regard to subsection (e)(4)(C)),
“(II) such distribution is not one of a series of periodic payments, and
“(III) the employee elects (at such time and in such manner as the Secretary shall by regulations prescribe) to have subparagraph (A) apply to such partial distribution.
“For purposes of subclause (I), the balance to the credit of the employee shall not include any accumulated deductible employee contributions (within the meaning of section 72(o)(5)). Any distribution described in section 401(a)(28)(B)(ii) shall be treated as meeting the requirements of subclauses (I) and (II).
“(ii) Partial distributions may be transferred only to individual retirement plans
“In the case of a partial distribution, a trust or plan described in subclause (III) or (IV) of subparagraph (E)(iv) shall not be treated as an eligible retirement plan.
“(iii) Denial of averaging for subsequent distributions
“If an election under clause (i) is made with respect to any partial distribution paid to any employee, paragraphs (1) and (3) of subsection (e) shall not apply to any distribution (paid after such partial distribution) of the balance to the credit of such employee under the plan under which such partial distribution was made (or under any other plan which, under subsection (e)(4)(C), would be aggregated with such plan).
“(iv) Special rule for unrealized appreciation
“If an election under clause (i) is made with respect to any partial distribution, the second and third sentences of paragraph (1) shall not apply to such distribution.
“(E) Definitions
“For purposes of this paragraph--
“(i) Qualified total distribution
“The term “qualified total distribution" means 1 or more distributions--
“(I) within 1 taxable year of the employee on account of a termination of the plan of which the trust is a part or, in the case of a profit-sharing or stock bonus plan, a complete discontinuance of contributions under such plan,
“(II) which constitute a lump sum distribution within the meaning of subsection (e)(4)(A) (determined without reference to subparagraphs (B) and (H) of subsection (e)(4)), or
“(III) which constitute a distribution of accumulated deductible employee contributions (within the meaning of section 72(o)(5)).
“(ii) Employee contributions
“The term “employee contributions" means--
“(I) the excess of the amounts considered contributed by the employee (determined by applying section 72(f)), over
“(II) any amounts theretofore distributed to the employee which were not includible in gross income (determined without regard to this paragraph).
“(iii) Qualified trust
The term “qualified trust” means an employees' trust described in section 401(a) which is exempt from tax under section 501(a).
“(iv) Eligible retirement plan
“The term “eligible retirement plan” means--
“(I) an individual retirement account described in section 408(a),
“(II) an individual retirement annuity described in section 408(b) (other than an endowment contract),
“(III) a qualified trust, and
“(IV) an annuity plan described in section 403(a).
“(v) Partial distribution
“The term “partial distribution" means any distribution to an employee of all or any portion of the balance to the credit of such employee in a qualified trust; except that such term shall not include any distribution which is a qualified total distribution.
“(F) Transfer treated as rollover contribution under section 408
“For purposes of this title, a transfer resulting in any portion of a distribution being excluded from gross income under subparagraph (A) to an eligible retirement plan described in subclause (I) or (II) of subparagraph (E)(iv) shall be treated as a rollover contribution described in section 408(d)(3).
“(G) Required distributions not eligible for rollover treatment
Subparagraph (A) shall not apply to any distribution to the extent such distribution is required under section 401(a)(9).
“(6) Special rollover rules
“(A) Time of termination
“For purposes of paragraph (5)(E)(i), a complete discontinuance of contributions under a profit-sharing or stock bonus plan shall be deemed to occur on the day the plan administrator notifies the Secretary (in accordance with regulations prescribed by the Secretary) that all contributions to the plan have been completely discontinued. For purposes of section 411(d)(3), the plan shall be considered to be terminated no later than the day such notice is filed with the Secretary.
“(B) Sale of subsidiary or assets
“For purposes of paragraph (5)(E)(i)--
“(i) A payment of the balance to the credit of an employee of a corporation (hereinafter referred to as the employer corporation) which is a subsidiary corporation (within the meaning of section 424(f)) or which is a member of a controlled group of corporations (within the meaning of section 1563(a), determined by substituting “50 percent” for “80 percent” each place it appears therein) in connection with the liquidation, sale, or other means of terminating the parent-subsidiary or controlled group relationship of the employer corporation with the parent corporation or controlled group, or
(ii) a payment of the balance to the credit of an employee of a corporation (hereinafter referred to as the acquiring corporation) in connection with the sale or other transfer to the acquiring corporation of all or substantially all of the assets used by the previous employer of the employee (hereinafter referred to as the selling corporation) in a trade or business conducted by the selling corporation, shall be treated as a payment or distribution on account of the termination of the plan with respect to such employee if the employees of the employer corporation or the acquiring corporation (whichever applies) are not active participants in such plan at the time of such payment or distribution. For purposes of this subparagraph, in no event shall a payment or distribution be deemed to be in connection with a sale or other transfer of assets, or a liquidation, sale, or other means of terminating such parent-subsidiary or controlled group relationship, if such payment or distribution is made later than the end of the second calendar year after the calendar year in which occurs such sale or other transfer of assets, or such liquidation, sale, or other means of terminating such parent-subsidiary or controlled group relationship.
“(C) Treatment of portion not rolled over
“If any portion of a lump sum distribution is transferred in a transfer to which paragraph (5)(A) applies, paragraphs (1) and (3) of subsection (e) shall not apply with respect to such lump sum distribution.
“(D) Sales of distributed property
“For purposes of subparagraphs (5) and (7)--
“(i) Transfer of proceeds from sale of distributed property treated as transfer of distributed property
“The transfer of an amount equal to any portion of the proceeds from the sale of property received in the distribution shall be treated as the transfer of property received in the distribution.
“(ii) Proceeds attributable to increase in value
“The excess of fair market value of property on sale over its fair market value on distribution shall be treated as property received in the distribution.
“(iii) Designation where amount of distribution exceeds rollover contribution
“In any case where part or all of the distribution consists of property other than money, the taxpayer may designate--
“(I) the portion of the money or other property which is to be treated as attributable to employee contributions (or, in the case of a partial distribution, the amount not includible in gross income), and
“(II) the portion of the money or other property which is to be treated as included in the rollover contribution.
“Any designation under this clause for a taxable year shall be made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). Any such designation, once made, shall be irrevocable.
“(iv) Treatment where no designation
“In any case where part or all of the distribution consists of property other than money and the taxpayer fails to make a designation under clause (iii) within the time provided therein, then--
“(I) the portion of the money or other property which is to be treated as attributable to employee contributions (or, in the case of a partial distribution, the amount not includible in gross income), and
“(II) the portion of the money or other property which is to be treated as included in the rollover contribution
“shall be determined on a ratable basis.
“(v) Nonrecognition of gain or loss
“In the case of any sale described in clause (i), to the extent that an amount equal to the proceeds is transferred pursuant to paragraph (5)(B) or (7) (as the case by [**So in original. Probably should be “may”.**] be), neither gain nor loss on such sale shall be recognized.
“(E) Special rule where employer maintains money purchase pension plan and other pension plan
“(i) In general
“In the case of any distribution from a money purchase pension plan which is maintained by an employer, for purposes of paragraph (5)(D) or (5)(E)(i)(II), subsection (e)(4)(C) shall be applied by not taking into account any pension plan maintained by such employer which is not a money purchase pension plan. The preceding sentence shall not apply to any distribution which is a qualified total distribution without regard to this subparagraph.
“(ii) Treatment of subsequent distributions
“If--
“(I) any distribution of the balance to the credit of an employee from a money purchase pension plan maintained by an employer is treated as a qualifying rollover distribution by reason of clause (i), and
“(II) any portion of such distribution is transferred in a transfer to which paragraph (5)(A) applies,
“then paragraphs (1) and (3) of subsection (e) shall not apply to any distribution (after the taxable year in which the distribution described in subparagraph (A) of paragraph (5) is made) of the balance to the credit of such employee from any other pension plan maintained by such employer.
“(F) Qualified domestic relations orders
“If--
“(i) within 1 taxable year of the recipient, the balance to the credit of the recipient by reason of any qualified domestic relations order (within the meaning of section 414(p)) is distributed or paid to the recipient,
“(ii) the recipient transfers any portion of the property the recipient receives in such distributions to an eligible retirement plan described in subclause (I) or (II) of paragraph (5)(E)(iv), and
“(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,
“then the portion of the distribution so transferred shall be treated as a distribution described in paragraph (5).
“(G) Payments from certain pension plan termination trusts
“If--
“(i) any amount is paid or distributed to a recipient from a trust described in section 501(c)(24),
“(ii) the recipient transfers any portion of the property received in such distribution to an eligible retirement plan described in subclause (I) or (II) of paragraph (5)(E)(iv), and
“(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,
“then the portion of the distribution so transferred shall be treated as a distribution described in paragraph (5)(A).
“(H) Special rule for frozen deposits
“(i) In general
“The 60-day period described in paragraph (5)(C) shall not--
“(I) include any period during which the amount transferred to the employee is a frozen deposit, or
“(II) end earlier than 10 days after such amount ceases to be a frozen deposit.
“(ii) Frozen deposit
“For purposes of this subparagraph, the term “frozen deposit” means any deposit which may not be withdrawn because of--
“(I) the bankruptcy or insolvency of any financial institution, or
“(II) any requirement imposed by the State in which such institution is located by reason of the bankruptcy or insolvency (or threat thereof) of 1 or more financial institutions in such State.
“A deposit shall not be treated as a frozen deposit unless on at least 1 day during the 60-day period described in paragraph (5)(C) (without regard to this subparagraph) such deposit is described in the preceding sentence.
“(I) Treatment of potential future vesting
“(i) In general
“For purposes of paragraph (5), in determining whether any portion of a distribution on account of the employee's separation from service may be transferred in a transfer to which paragraph (5)(A) applies, the balance to the credit of the employee shall be determined without regard to any increase in vesting which may occur if the employee is re-employed by the employer.
“(ii) Treatment of subsequent distributions
“If--
“(I) any portion of a distribution is transferred in a transfer to which paragraph (5)(A) applies by reason of clause (i),
“(II) the employee is subsequently re-employed by the employer, and
“(III) as a result of service performed after being so re-employed, there is an increase in the employee's vesting for benefits accrued before the separation referred to in clause (i),
“then the provisions of paragraph (5)(D)(iii) shall apply to any distribution from the plan after the distribution referred to in clause (i). The preceding sentence shall not apply if the distribution referred to in subclause (I) is made without the consent of the participant.
“(7) Rollover where spouse receives distributions after death of employee
“If any distribution attributable to an employee is paid to the spouse of the employee after the employee's death, paragraph (5) shall apply to such distribution in the same manner as if the spouse were the employee; except that a trust or plan described in subclause (III) or (IV) of paragraph (5)(E)(iv) shall not be treated as an eligible retirement plan with respect to such distribution.
“(8) Cash or deferred arrangements
“For purposes of this title, contributions made by an employer on behalf of an employee to a trust which is a part of a qualified cash or deferred arrangement (as defined in section 401(k)(2)) shall not be treated as distributed or made available to the employee nor as contributions made to the trust by the employee merely because the arrangement includes provisions under which the employee has an election whether the contribution will be made to the trust or received by the employee in cash.
“(9) Alternate payee under qualified domestic relations order treated as distributee
“For purposes of subsection (a)(1) and section 72, any alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p)).
“(b) Taxability of beneficiary of nonexempt trust
“(1) In general
“Contributions to an employees' trust made by an employer during a taxable year of the employer which ends within or with a taxable year of the trust for which the trust is not exempt from tax under section 501(a) shall be included in the gross income of the employee in accordance with section 83 (relating to property transferred in connection with performance of services), except that the value of the employee's interest in the trust shall be substituted for the fair market value of the property for purposes of applying such section. The amount actually distributed or made available to any distributee by any such trust shall be taxable to him in the year in which so distributed or made available, under section 72 (relating to annuities), except that distributions of income of such trust before the annuity starting date (as defined in section 72(c)(4)) shall be included in the gross income of the employee without regard to section 72(e)(5) (relating to amount not received as annuities). A beneficiary of any such trust shall not be considered the owner of any portion of such trust under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners).
“(2) Failure to meet requirements of section 410(b)
“(A) Highly compensated employees
“If 1 of the reasons a trust is not exempt from tax under section 501(a) is the failure of the plan of which it is a part to meet the requirements of section 401(a)(26) or 410(b), then a highly compensated employee shall, in lieu of the amount determined under paragraph (1), include in gross income for the taxable year with or within which the taxable year of the trust ends an amount equal to the vested accrued benefit of such employee (other than the employee's investment in the contract) as of the close of such taxable year of the trust.
“(B) Failure to meet coverage tests
“If a trust is not exempt from tax under section 501(a) for any taxable year solely because such trust is part of a plan which fails to meet the requirements of section 401(a)(26) or 410(b), paragraph (1) shall not apply by reason of such failure to any employee who was not a highly compensated employee during--
“(i) such taxable year, or
“(ii) any preceding period for which service was creditable to such employee under the plan.
“(C) Highly compensated employee
“For purposes of this paragraph, the term “highly compensated employee” has the meaning given such term by section 414(q).
“(c) Taxability of beneficiary of certain foreign situs trusts
“For purposes of subsections (a) and (b), a stock bonus, pension, or profit-sharing trust which would qualify for exemption from tax under section 501(a) except for the fact that it is a trust created or organized outside the United States shall be treated as if it were a trust exempt from tax under section 501(a).
“[(d) Repealed. Pub. L. 94-455, title XIX, 1901(a) (57)(B), Oct. 4, 1976, 90 Stat. 1773]
“(e) Tax on lump sum distributions
“(1) Imposition of separate tax on lump sum distributions
“(A) Separate tax
“There is hereby imposed a tax (in the amount determined under subparagraph (B)) on the lump sum distribution.
“(B) Amount of tax
“The amount of tax imposed by subparagraph (A) for any taxable year is an amount equal to 5 times the tax which would be imposed by subsection (c) of section 1 if the recipient were an individual referred to in such subsection and the taxable income were an amount equal to 1/5 of the excess of--
“(i) the total taxable amount of the lump sum distribution for the taxable year, over
“(ii) the minimum distribution allowance.
“For purposes of the preceding sentence, in determining the amount of tax under section 1(c), section 1(g) shall be applied without regard to paragraph (2)(B) thereof.
“(C) Minimum distribution allowance
“For purposes of this paragraph, the minimum distribution allowance for the taxable year is an amount equal to--
“(i) the lesser of $10,000 or one-half of the total taxable amount of the lump sum distribution for the taxable year, reduced (but not below zero) by
“(ii) 20 percent of the amount (if any) by which such total taxable amount exceeds $20,000.
“(D) Liability for tax
“The recipient shall be liable for the tax imposed by this paragraph.
“(2) Multiple distributions and distributions of annuity contracts.
“In the case of any recipient of a lump sum distribution for the taxable year with respect to whom during the 6-taxable-year period ending on the last day of the taxable year there has been one or more other lump sum distributions after December 31, 1973, or if the distribution (or any part hereof) is an annuity contract, in computing the tax imposed by paragraph (1)(A), the total taxable amounts of all such distributions during such 6-taxable-year period shall be aggregated, but the amount of tax so computed shall be reduced (but not below zero) by the sum of--
“(A) the amount of the tax imposed by paragraph (1)(A) paid with respect to such other distributions, plus
“(B) that portion of the tax on the aggregated total taxable amounts which is attributable to annuity contracts.
“For purposes of this paragraph, a beneficiary of a trust to which a lump sum distribution is made shall be treated as the recipient of such distribution if the beneficiary is an employee (including an employee within the meaning of section 401(c)(1)) with respect to the plan under which the distribution is made or if the beneficiary is treated as the owner of such trust for purposes of subpart E of part I of subchapter J. In the case of the distribution of an annuity contract, the taxable amount of such distribution shall be deemed to be the current actuarial value of the contract, determined on the date of such distribution. In the case of a lump sum distribution with respect to any individual which is made only to two or more trusts, the tax imposed by paragraph (1)(A) shall be computed as if such distribution was made to a single trust, but the liability for such tax shall be apportioned among such trusts according to the relative amounts received by each. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph.
“(3) Allowance of deduction
“The total taxable amount of a lump sum distribution for the taxable year shall be allowed as a deduction from gross income for such taxable year, but only to the extent included in the taxpayer's gross income for such taxable year.
“(4) Definitions and special rules
“(A) Lump sum distribution
“For purposes of this section and section 403, the term “lump sum distribution” means the distribution or payment within one taxable year of the recipient of the balance to the credit of an employee which becomes payable to the recipient--
“(i) on account of the employee's death,
“(ii) after the employee attains age 59-1/2,
“(iii) on account of the employee's separation from the service, or
“(iv) after the employee has become disabled (within the meaning of section 72(m)(7))
“from a trust which forms a part of a plan described in section 401(a) and which is exempt from tax under section 501 or from a plan described in section 403(a). Clause (iii) of this subparagraph shall be applied only with respect to an individual who is an employee without regard to section 401(c)(1), and clause (iv) shall be applied only with respect to an employee within the meaning of section 401(c)(1). A distribution of an annuity contract from a trust or annuity plan referred to in the first sentence of this subparagraph shall be treated as a lump sum distribution. For purposes of this subparagraph, a distribution to two or more trusts shall be treated as a distribution to one recipient. For purposes of this subsection, the balance to the credit of the employee does not include the accumulated deductible employee contributions under the plan (within the meaning of section 72(o)(5)).
“(B) Averaging to apply to 1 lump sum distribution after age 59-1/2
“Paragraph (1) shall apply to a lump sum distribution with respect to an employee under subparagraph (A) only if--
“(i) such amount is received on or after the employee has attained age 59-1/2, and
“(ii) the taxpayer elects for the taxable year to have all such amounts received during such taxable year so treated.
“Not more than 1 election may be made under this subparagraph by any taxpayer with respect to any employee. No election may be made under this subparagraph by any taxpayer other than an individual, an estate, or a trust. In the case of a lump sum distribution made with respect to an employee to 2 or more trusts, the election under this subparagraph shall be made by the personal representative of the taxpayer.
“(C) Aggregation of certain trusts and plans
“For purposes of determining the balance to the credit of an employee under subparagraph (A)--
“(i) all trusts which are part of a plan shall be treated as a single trust, all pension plans maintained by the employer shall be treated as a single plan, all profit-sharing plans maintained by the employer shall be treated as a single plan, and all stock bonus plans maintained by the employer shall be treated as a single plan, and
“(ii) trusts which are not qualified trusts under section 401(a) and annuity contracts which do not satisfy the requirements of section 404(a)(2) shall not be taken into account.
“(D) Total taxable amount
“For purposes of this section and section 403, the term “total taxable amount” means, with respect to a lump sum distribution, the amount of such distribution which exceeds the sum of--
“(i) the amounts considered contributed by the employee (determined by applying section 72(f)), which employee contributions shall be reduced by any amounts theretofore distributed to him which were not includible in gross income, and
“(ii) the net unrealized appreciation attributable to that part of the distribution which consists of the securities of the employer corporation so distributed.
“[(E) Repealed. Pub. L. 99-514, title XI, 1122(b)(2)(D), Oct. 22, 1986, 100 Stat. 2467]
“[(F) Repealed. Pub. L. 99-514, title XVIII, 1852(b)(3)(B), Oct. 22, 1986, 100 Stat. 2866]
“(G) Community property laws
“The provisions of this subsection, other than paragraph (3), shall be applied without regard to community property laws.
“(H) Minimum period of service
“For purposes of this subsection, no amount distributed to an employee from or under a plan may be treated as a lump sum distributed under subparagraph (A) unless he has been a participant in the plan for 5 or more taxable years before the taxable year in which such amounts are distributed.
“(I) Amounts subject to penalty
“This subsection shall not apply to amounts described in subparagraph (A) of section 72(m)(5) to the extent that section 72(m)(5) applies to such amounts.
“(J) Unrealized appreciation of employer securities
“In the case of any distribution including securities of the employer corporation which, without regard to the requirement of subparagraph (H), would be treated as a lump sum distribution under subparagraph (A), there shall be excluded from gross income the net unrealized appreciation attributable to that part of the distribution which consists of securities of the employer corporation so distributed. In the case of any such distribution or any lump sum distribution including securities of the employer corporation, the amount of net unrealized appreciation of such securities and the resulting adjustments to the basis of such securities shall be determined under regulations prescribed by the Secretary. This subparagraph shall not apply to distributions of accumulated deductible employee contributions (within the meaning of section 72(o)(5)). In accordance with rules prescribed by the Secretary, a taxpayer may elect, on the return of tax on which a distribution is required to be included, not to have this subparagraph apply with respect to such distribution.
“(K) Securities
“For purposes of this subsection, the terms “securities” and “securities of the employer corporation" have the respective meanings provided by subsection (a)(3).
“[(L) Repealed. Pub. L. 100-647, title I, 1011A(b)(8)(G), Nov. 10, 1988, 102 Stat. 3474]
“(M) Balance to credit of employee not to include amounts payable under qualified domestic relations order
“For purposes of this subsection, the balance to the credit of an employee shall not include any amount payable to an alternate payee under a qualified domestic relations order (within the meaning of section 414(p)).
“(N) Transfers to cost-of-living arrangement not treated as distribution
“For purposes of this subsection, the balance to the credit of an employee under a defined contribution plan shall not include any amount transferred from such defined contribution plan to a qualified cost-of-living arrangement (within the meaning of section 415(k)(2)) under a defined benefit plan.
“(O) Lump-sum distributions of alternate payees
“If any distribution or payment of the balance to the credit of an employee would be treated as a lump-sum distribution, then, for purposes of this subsection, the payment under a qualified domestic relations order (within the meaning of section 414(p)) of the balance to the credit of an alternate payee who is the spouse or former spouse of the employee shall be treated as a lump-sum distribution. For purposes of this subparagraph, the balance to the credit of the alternate payee shall not include any amount payable to the employee.
“(5) Special rule where portion of lump-sum distribution attributable to rollover of bond purchased under qualified bond purchase plan
If any portion of a lump-sum distribution is attributable to a transfer described in section 405(d)(3)(A)(ii) (as in effect before its repeal by the Tax Reform Act of 1984), paragraphs (1) and (3) of this subsection shall not apply to such portion.
“(6) Treatment of potential future vesting
“(A) In general
“For purposes of determining whether any distribution which becomes payable to the recipient on account of the employee's separation from service is a lump sum distribution, the balance to the credit of the employee shall be determined without regard to any increase in vesting which may occur if the employee is re-employed by the employer.
“(B) Recapture in certain cases
“If--
“(i) an amount is treated as a lump sum distribution by reason of subparagraph (A),
“(ii) special lump sum treatment applies to such distribution,
“(iii) the employee is subsequently re-employed by the employer; and
“(iv) as a result of services performed after being so re-employed, there is an increase in the employee's vesting for benefits accrued before the separation referred to in subparagraph (A),
“under regulations prescribed by the Secretary, the tax imposed by this chapter for the taxable year (in which the increase in vesting first occurs) shall be increased by the reduction in tax which resulted from the special lump sum treatment (and any election under paragraph (4)(B) shall not be taken into account for purposes of determining whether the employee may make another election under paragraph (4)(B)).
“(C) Special lump sum treatment
“For purposes of this paragraph, special lump sum treatment applies to any distribution if any portion of such distribution is taxed under this subsection by reason of an election under paragraph (4)(B).
“(D) Vesting
“For purposes of this paragraph the term “vesting” means the portion of the accrued benefits derived from employer contributions to which the participant has a nonforfeitable right.
“(7) Coordination with Foreign Tax Credit Limitations
“Subsections (a), (b) and (c) of section 904 shall be applied separately with respect to any lump sum distribution on which tax is imposed under paragraph (1), and the amount of such distribution shall be treated as the taxable income for purposes of such separate application.
“(f) Written explanation to recipients of distributions eligible for rollover treatment
“(1) In general
The plan administrator of any plan shall, when making an eligible rollover distribution, provide a written explanation to the recipient--
“(A) of the provisions under which such distribution will not be subject to tax if transferred to an eligible retirement plan within 60 days after the date on which the recipient received the distribution, and
“(B) if applicable, the provisions of subsections (a)(2) and (e) of this section.
“(2) Definitions
“For purposes of this subsection--
“(A) Eligible rollover distribution
“The term “eligible rollover distribution” means any distribution any portion of which may be excluded from gross income under subsection (a)(5) of this section or subsection (a)(4) of section 403 if transferred to an eligible retirement plan in accordance with the requirements of such subsection.
“(B) Eligible retirement plan
“The term “eligible retirement plan” has the meaning given such term by subsection (a)(5)(E)(iv).”
Subsec. (e)(6). Pub. L. 102-318, Sec. 522(c)(1), added par. (6).
Subsec. (g)(1). Pub. L. 102-318, Sec. 521(b)(9), amended par. (1) by substituting “subsections (e)(3)” for “subsections (a)(8)”.
Subsec. (i). Pub. L. 102-318, Sec. 521(b)(10), amended subsec. (i) by substituting “subsection (d)(4)” for “subsection (e)(4)”.
Subsec. (j). Pub. L. 102-318, Sec. 521(b)(11), amended subsec. (j) by substituting “(e)(4)” for “(a)(1) or (e)(4)(J)”.
1990 - Subsec. (a)(3)(B). Pub. L. 101-508, Sec. 11801(c)(9)(I)(i), substituted ‘section 424’ for ‘section 425’.
Subsec. (a)(6)(B)(i). Pub. L. 101-508, Sec. 11801(c)(9)(I)(ii), substituted ‘section 424(f)’ for ‘section 425(f)’.
1989 - Subsec. (e)(7). Pub. L. 101-239, Sec. 7811(i)(13), added par. (7).
Subsec. (g)(3). Pub. L. 101-239, Sec. 7811(g)(2), inserted ‘involving a one-time irrevocable election’ after ‘similar arrangement’ in last sentence.
1988 - Subsec. (a)(1). Pub. L. 100-647, Sec. 1011A(b)(8)(A), substituted ‘paragraph (4)’ for ‘paragraphs (2) and (4)’.
Subsec. (a)(4). Pub. L. 100-647, Sec. 1011A(b)(8)(B), struck out ‘or (2)’ after ‘under paragraph (1)’.
Subsec. (a)(5)(D)(i). Pub. L. 100-647, Sec. 1011A(b)(4)(C), inserted at end ‘Any distribution described in section 401(a)(28)(B)(ii) shall be treated as meeting the requirements of subclauses (I) and (II).’
Pub. L. 100-647, Sec. 1011A(b)(4)(A), repealed amendment by Pub. L. 99-514, Sec. 1122(e)(1), which had amended cl. (i) generally, and provided that the Internal Revenue Code of 1986 shall be applied and administered as if such amendment had not been enacted. See 1986 Amendment note and Effective Date of 1988 Amendment note below.
Subsec. (a)(5)(D)(i)(I). Pub. L. 100-647, Sec. 1011A(b)(4)(B), inserted ‘is payable as provided in clause (i), (iii), or (iv) of subsection (e)(4)(A) (without regard to the second sentence thereof) and’ after ‘(I) such distribution’.
Subsec. (a)(5)(D)(iii). Pub. L. 100-647, Sec. 1011A(b)(4)(D), struck out ‘10-year’ after ‘Denial of’ in heading.
Subsec. (a)(5)(F). Pub. L. 100-647, Sec. 1011A(a)(1), substituted ‘resulting in any portion of a distribution being excluded from gross income under subparagraph (A)’ for ‘described in subparagraph (A)’.
Subsec. (a)(6)(C). Pub. L. 100-647, Sec. 1011A(b)(8)(C), struck out ‘paragraph (2) of subsection (a), and’ after ‘paragraph (5)(A) applies,’.
Subsec. (a)(6)(E)(ii). Pub. L. 100-647, Sec. 1011A(b)(8)(D), substituted ‘then paragraphs (1) and (3) of subsection (e) shall’ for ‘then paragraph (2) of subsection (a), and paragraphs (1) and (3) of subsection (e), shall’.
Subsec. (a)(6)(G). Pub. L. 100-647, Sec. 1018(t)(8)(A), redesignated subpar. (G), relating to treatment of potential future vesting, as (I).
Subsec. (a)(6)(H)(ii). Pub. L. 100-647, Sec. 1011A(b)(5), inserted at end ‘A deposit shall not be treated as a frozen deposit unless on at least 1 day during the 60-day period described in paragraph (5)(C) (without regard to this subparagraph) such deposit is described in the preceding sentence.’
Subsec. (a)(6)(I). Pub. L. 100-647, Sec. 1018(t)(8)(A), redesignated subpar. (G), relating to treatment of potential future vesting, as (I).
Subsec. (b)(2)(A). Pub. L. 100-647, Sec. 1011(h)(4), added subpar. (A) and struck out former subpar. (A) which related to trust which is not exempt from tax under section 501(a) because plan fails to meet requirements of section 410(b).
Subsec. (b)(2)(B). Pub. L. 100-647, Sec. 1011(h)(4), added subpar. (B) and struck out former subpar. (B) which related to failure of plan to meet requirements of section 410(b) for more than 1 taxable year.
Subsec. (e)(1)(A). Pub. L. 100-647, Sec. 1011A(b)(8)(E), struck out ‘ordinary income portion of a’ after ‘subparagraph (B)) on the’.
Subsec. (e)(1)(B). Pub. L. 100-647, Sec. 1011A(b)(10), inserted at end ‘For purposes of the preceding sentence, in determining the amount of tax under section 1(c), section 1(g) shall be applied without regard to paragraph (2)(B) thereof.’
Pub. L. 100-647, Sec. 1018(u)(1), made technical correction to directory language of Pub. L. 99-514, Sec. 104(b)(5). See 1986 Amendment note below.
Pub. L. 100-647, Sec. 1018(u)(6), related to execution of amendment by Pub. L. 99-514, Sec. 1122(b)(2)(B), see 1986 Amendment note below.
Subsec. (e)(3). Pub. L. 100-647, Sec. 1018(u)(7), related to execution of amendment by Pub. L. 99-514, Sec. 1122(b)(2)(C), see 1986 Amendment note below.
Subsec. (e)(4)(A). Pub. L. 100-647, Sec. 1011A(b)(8)(F), in concluding provisions, substituted ‘A’ for ‘Except for purposes of subsection (a)(2) and section 403(a)(2), a’, and struck out ‘subsection (a)(2) of this section, and subsection (a)(2) of section 403,’ before ‘the balance to’.
Subsec. (e)(4)(B)(i). Pub. L. 100-647, Sec. 1011A(b)(6), substituted ‘employee’ for ‘taxpayer’.
Subsec. (e)(4)(I). Pub. L. 100-647, Sec. 1011A(c)(9), struck out ‘clause (ii) of’ after ‘amounts described in’.
Subsec. (e)(4)(J). Pub. L. 100-647, Sec. 1011A(b)(7), amended last sentence generally. Prior to amendment, last sentence read as follows: ‘To the extent provided by the Secretary, a taxpayer may elect before any distribution not to have this paragraph apply with respect to such distribution.’
Subsec. (e)(4)(L). Pub. L. 100-647, Sec. 1011A(b)(8)(G), struck out subpar. (L) which related to election to treat pre-1974 participation as post-1973 participation.
Subsec. (e)(4)(M). Pub. L. 100-647, Sec. 1011A(b)(8)(H), struck out ‘, subsection (a)(2) of this section, and section 403(a)(2)’ after ‘of this subsection’.
Subsec. (e)(4)(O). Pub. L. 100-647, Sec. 6068(a), added subpar. (O).
Subsec. (e)(5). Pub. L. 100-647, Sec. 1011A(b)(8)(I), struck out ‘and paragraph (2) of subsection (a)’ after ‘of this subsection’.
Subsec. (e)(6)(C). Pub. L. 100-647, Sec. 1011A(b)(8)(J), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: ‘For purposes of this paragraph, special lump sum treatment applies to any distribution if any portion of such distribution -
‘(i) is taxed under this subsection by reason of an election under paragraph (4)(B), or
‘(ii) is treated as long-term capital gain under subsection (a)(2) of this section or section 403(a)(2).’
Subsec. (f)(1). Pub. L. 100-647, Sec. 1018(t)(8)(C), substituted ‘an eligible’ for ‘a eligible’.
Subsec. (g). Pub. L. 100-647, Sec. 1011(c)(6)(B), redesignated subsec. (g), relating to effect of disposition of stock by plan on net unrealized appreciation, as (j).
Pub. L. 100-647, Sec. 1011(c)(6)(A), redesignated subsec. (g), relating to treatment of self-employed individuals, as (i).
Subsec. (g)(2). Pub. L. 100-647, Sec. 1011(c)(2), substituted ‘Distribution’ for ‘Required distribution’ in heading.
Subsec. (g)(2)(C). Pub. L. 100-647, Sec. 1011(c)(1), struck out ‘(and no tax shall be imposed under section 72(t))’ after ‘in gross income’, in cl. (i), substituted ‘such income is distributed’ for ‘such excess deferral is made’ in cl. (ii), and inserted at end ‘No tax shall be imposed under section 72(t) on any distribution described in the preceding sentence.’
Subsec. (g)(2)(D). Pub. L. 100-647, Sec. 1011(c)(3), added subpar. (D).
Subsec. (g)(3). Pub. L. 100-647, Sec. 1011(c)(4), substituted ‘this subsection’ for ‘this paragraph’.
Pub. L. 100-647, Sec. 1011(c)(11), inserted at end ‘An employer contribution shall not be treated as an elective deferral described in subparagraph (C) if under the salary reduction agreement such contribution is made pursuant to a one-time irrevocable election made by the employee at the time of initial eligibility to participate in the agreement or is made pursuant to a similar arrangement specified in regulations.’
Subsec. (g)(8)(A)(iii). Pub. L. 100-647, Sec. 1011(c)(5)(A), inserted ‘(determined in the manner prescribed by the Secretary)’ after ‘prior taxable years’.
Subsec. (g)(8)(D). Pub. L. 100-647, Sec. 1011(c)(5)(B), added subpar. (D).
Subsec. (i). Pub. L. 100-647, Sec. 1011(c)(6)(A), redesignated subsec. (g), relating to treatment of self-employed individuals, as (i).
Subsec. (j). Pub. L. 100-647, Sec. 1011(c)(6)(B), redesignated subsec. (g), relating to effect of disposition of stock by plan on net unrealized appreciation, as (j).
1986 - Subsec. (a)(2). Pub. L. 99-514, Sec. 1122(b)(1)(A), struck out par. (2) relating to capital gains treatment for portion of lump sum distribution.
Subsec. (a)(5)(D)(i). Pub. L. 99-514, Sec. 1122(e)(1), amended cl. (i) generally, to read as follows: ‘Subparagraph (A) shall apply to a partial distribution only if the employee elects to have subparagraph (A) apply to such distribution and such distribution would be a lump sum distribution if subsection (e)(4)(A) were applied -
‘(I) by substituting ‘50 percent of the balance to the credit of an employee’ for ‘the balance to the credit of an employee’,
‘(II) without regard to clause (ii) thereof, the second sentence thereof, and subparagraph (B) of subsection (e)(4).
Any distribution described in section 401(a)(28)(B)(ii) shall be treated as meeting the requirements of this clause.' This amendment was repealed by Pub. L. 100-647, Sec. 1011A(b)(4)(A). See 1988 Amendment note above.
Pub. L. 99-514, Sec. 1852(b)(2), inserted at end ‘For purposes of subclause (I), the balance to the credit of the employee shall not include any accumulated deductible employee contributions (within the meaning of section 72(o)(5)).’
Subsec. (a)(5)(D)(ii). Pub. L. 99-514, Sec. 1852(b)(5), substituted ‘a trust or plan described in subclause (III) or (IV)’ for ‘a plan described in subclause (IV) or (V)’.
Subsec. (a)(5)(D)(iii). Pub. L. 99-514, Sec. 1122(b)(2)(A), struck out ‘and capital gains treatment’ in heading and amended text generally. Prior to amendment, cl. (iii) read as follows: ‘If an election under clause (i) is made with respect to any partial distribution paid to any employee -
‘(I) paragraph (2) of this subsection,
‘(II) paragraphs (1) and (3) of subsection (e), and
‘(III) paragraph (2) of section 403(a), shall not apply to any distribution (paid after such partial distribution) of the balance to the credit of such employee under the plan under which such partial distribution was made (or under any other plan which, under subsection (e)(4)(C), would be aggregated with such plan).’
Subsec. (a)(5)(E)(v). Pub. L. 99-514, Sec. 1852(b)(1), substituted ‘of all or any portion of’ for ‘of any portion of’.
Subsec. (a)(5)(F). Pub. L. 99-514, Sec. 1121(c)(1), amended subpar. (F) generally. Prior to amendment, subpar. (F) heading read ‘Special rules’ and text read as follows:
‘(i) Transfer treated as rollover contribution under section 408
‘For purposes of this title, a transfer resulting in any portion of a distribution being excluded from gross income under subparagraph (A) to an eligible retirement plan described in subclause (I) or (II) of subparagraph (E)(iv) shall be treated as a rollover contribution described in section 408(d)(3).
‘(ii) 5-percent owners
‘An eligible retirement plan described in subclause (III) or (IV) of subparagraph (E)(iv) shall not be treated as an eligible retirement plan for the transfer of a distribution if the employee is a 5-percent owner at the time such distribution is made. For purposes of the preceding sentence, the term ‘5-percent owner’ means any individual who is a 5-percent owner (as defined in section 416(i)(1)(B)) at any time during the 5 plan years preceding the plan year in which the distribution is made.'
Pub. L. 99-514, Sec. 1852(b)(6), in cl. (i) substituted ‘a transfer resulting in any portion of a distribution being excluded from gross income under subparagraph (A)’ for ‘a transfer described in subparagraph (A)’.
Pub. L. 99-514, Sec. 1875(c)(1)(A), amended cl. (ii) generally. Prior to amendment, cl. (ii), key employees, read as follows: ‘An eligible retirement plan described in subclause (III) or (IV) of subparagraph (E)(iv) shall not be treated as an eligible retirement plan for the transfer of a distribution if any part of the distribution is attributable to contributions made on behalf of the employee while he was a key employee in a top-heavy plan. For purposes of the preceding sentence, the terms ‘key employee’ and ‘top-heavy plan’ have the same respective meanings as when used in section 416.'
Subsec. (a)(5)(G). Pub. L. 99-514, Sec. 1852(a)(5)(A), added subpar. (G).
Subsec. (a)(6)(D)(v). Pub. L. 99-514, Sec. 1852(b)(7), substituted ‘(7)’ for ‘(7)(B)’.
Subsec. (a)(6)(F). Pub. L. 99-514, Sec. 1898(c)(7)(A)(i), substituted ‘paragraph (5)’ for ‘paragraph (5)(A)’.
Subsec. (a)(6)(G). Pub. L. 99-514, Sec. 1898(a)(3), added subpar. (G) relating to treatment of potential future vesting.
Pub. L. 99-272 added subpar. (G) relating to payments from certain pension plan termination trusts.
Subsec. (a)(6)(H). Pub. L. 99-514, Sec. 1122(e)(2)(A), added subpar. (H).
Subsec. (a)(7). Pub. L. 99-514, Sec. 1852(b)(4), inserted ‘; except that a trust or plan described in subclause (III) or (IV) of paragraph (5)(E)(iv) shall not be treated as an eligible retirement plan with respect to such distribution’ after ‘the spouse were the employee’.
Subsec. (a)(9). Pub. L. 99-514, Sec. 1898(c)(1)(A), substituted ‘any alternate payee who is the spouse or former spouse of the participant shall be treated’ for ‘the alternate payee shall be treated’.
Subsec. (b). Pub. L. 99-514, Sec. 1112(c), designated existing provisions as par. (1), inserted par. (1) heading, and added par. (2).
Pub. L. 99-514, Sec. 1852(c)(5), substituted ‘section 72(e)(5)’ for ‘section 72(e)(1)’.
Subsec. (e)(1)(B). Pub. L. 99-514, Sec. 1122(b)(2)(B), and Pub. L. 100-647, Sec. 1018(u)(6), redesignated subpar. (C) as (B), substituted ‘Amount of tax’ for ‘Initial separate tax’ in heading and ‘The amount of tax imposed by subparagraph (A)’ for ‘The initial separate tax’, and struck out former subpar. (B) which related to computation of tax on lump sum distributions.
Pub. L. 99-514, Sec. 104(b)(5), as amended by Pub. L. 100-647, Sec. 1018(u)(1), struck out ‘the zero bracket amount applicable to such individual for the taxable year plus’ after ‘amount equal to’.
Pub. L. 99-514, Sec. 1122(a)(2)(A), (B), substituted ‘5’ for ‘10’ and ‘ 1/5’ for ‘one-tenth’.
Subsec. (e)(1)(C) to (E). Pub. L. 99-514, Sec. 1122(b)(2)(B)(i), redesignated subpars. (C) to (E) as (B) to (D), respectively.
Subsec. (e)(3). Pub. L. 99-514, Sec. 1122(b)(2)(C), and Pub. L. 100-647, Sec. 1018(u)(7), substituted ‘total taxable amount’ for ‘ordinary income portion’.
Subsec. (e)(4)(B). Pub. L. 99-514, Sec. 1122(a)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘For purposes of this section and section 403, no amount which is not an annuity contract may be treated as a lump sum distribution under subparagraph (A) unless the taxpayer elects for the taxable year to have all such amounts received during such year so treated at the time and in the manner provided under regulations prescribed by the Secretary. Not more than one election may be made under this subparagraph with respect to any individual after such individual has attained age 59 1/2. No election may be made under this subparagraph by any taxpayer other than an individual, an estate, or a trust. In the case of a lump sum distribution made with respect to an employee to two or more trusts, the election under this subparagraph shall be made by the personal representative of the employee.’
Subsec. (e)(4)(E). Pub. L. 99-514, Sec. 1122(b)(2)(D), struck out subpar. (E) defining ‘ordinary income portion’ with respect to a lump sum distribution.
Subsec. (e)(4)(F). Pub. L. 99-514, Sec. 1852(b)(3)(B), struck out subpar. (F) defining ‘employee’. See subsec. (g) of this section relating to treatment of self-employed individuals.
Subsec. (e)(4)(H). Pub. L. 99-514, Sec. 1122(b)(2)(E), struck out ‘(but not for purposes of subsection (a)(2) or section 403(a)(2)(A))’ after ‘For purposes of this subsection’.
Subsec. (e)(4)(J). Pub. L. 99-514, Sec. 1122(g), inserted at end ‘To the extent provided by the Secretary, a taxpayer may elect before any distribution not to have this paragraph apply with respect to such distribution.’
Subsec. (e)(4)(N). Pub. L. 99-514, Sec. 1106(c)(2), added subpar. (N).
Subsec. (e)(6). Pub. L. 99-514, Sec. 1898(a)(2), added par. (6).
Subsec. (f)(1). Pub. L. 99-514, Sec. 1898(e)(1), substituted ‘eligible rollover distribution’ for ‘qualifying rollover distribution’.
Subsec. (f)(2). Pub. L. 99-514, Sec. 1898(e)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘For purposes of this subsection, the terms ‘qualifying rollover distribution’ and ‘eligible retirement plan’ have the respective meanings given such terms by subsection (a)(5)(E).'
Subsec. (g). Pub. L. 99-514, Sec. 1854(f)(2), added subsec. (g) relating to effect of disposition of stock by plan on net unrealized appreciation.
Pub. L. 99-514, Sec. 1852(b)(3)(A), added subsec. (g) relating to treatment of self-employed individuals.
Pub. L. 99-514, Sec. 1105(a), added subsec. (g) relating to limitation on exclusion for elective deferrals.
Subsec. (h). Pub. L. 99-514, Sec. 1108(b), added subsec. (h).
1984 - Subsec. (a)(2). Pub. L. 98-369, Sec. 1001(b)(3), substituted ‘6 months’ for ‘1 year’.
Subsec. (a)(5)(A)(i). Pub. L. 98-369, Sec. 522(a)(1), substituted ‘any portion of the balance to the credit of an employee in a qualified trust is paid to him’ for ‘the balance to the credit of an employee in a qualified trust is paid to him in a qualifying rollover distribution’.
Subsec. (a)(5)(B). Pub. L. 98-369, Sec. 522(d)(1)(A), (2), substituted ‘qualified total distribution’ for ‘qualifying rollover distribution’, and inserted ‘In the case of any partial distribution, the maximum amount transferred to which subparagraph (A) applies shall not exceed the portion of such distribution which is includible in gross income (determined without regard to subparagraph (A)).’
Subsec. (a)(5)(D). Pub. L. 98-369, Sec. 522(b), added subpar. (D). Former subpar. (D) redesignated (E).
Subsec. (a)(5)(D)(iv)(III)-(V). Pub. L. 98-369, Sec. 491(d)(9), struck out subcl. (III), which included a retirement bond described in section 409 within term ‘eligible retirement plan’ and redesignated former subcls. (IV) and (V) and (III) and (IV), respectively.
Subsec. (a)(5)(E). Pub. L. 98-369, Sec. 522(b), redesignated subpar. (D) as (E). Former subpar. (E) redesignated (F).
Subsec. (a)(5)(E)(i). Pub. L. 98-369, Sec. 522(d)(1)(B), substituted ‘qualified total distribution’ for ‘qualifying rollover distribution’ in heading and text.
Subsec. (a)(5)(E)(ii)(II). Pub. L. 98-369, Sec. 522(d)(3), substituted ‘gross income (determined without regard to this paragraph)’ for ‘gross income’.
Subsec. (a)(5)(E)(v). Pub. L. 98-369, Sec. 522(d)(4), substituted provision dealing with partial distribution for provision dealing with rollover of partial distributions of deductible employee contributions permitted.
Subsec. (a)(5)(F). Pub. L. 98-369, Sec. 522(b), redesignated subpar. (E) as (F).
Subsec. (a)(5)(F)(i). Pub. L. 98-369, Sec. 522(d)(5), substituted ‘subparagraph (E)(iv)’ for ‘subparagraph (D)(iv)’.
Pub. L. 98-369, Sec. 491(d)(10), substituted ‘or (II)’ for ‘, (II), or (III)’.
Subsec. (a)(5)(F)(ii). Pub. L. 98-369, Sec. 522(d)(5), substituted ‘subparagraph (E)(iv)’ for ‘subparagraph (D)(iv)’.
Pub. L. 98-369, Sec. 491(d)(11), substituted ‘(III) or (IV)’ for ‘(IV) and (V)’.
Pub. L. 98-369, Sec. 713(c)(3), substituted ‘Key employees’ for ‘Self-employed individuals and owner-employees’ in heading and ‘attributable to contributions made on behalf of the employee while he was a key employee in a top-heavy plan’ for ‘attributable to a trust forming part of a plan under which the employee was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan’ in text, and inserted sentence adopting the meaning of ‘key employee’ and ‘top-heavy plan’ used in section 416.
Subsec. (a)(6)(A), (B). Pub. L. 98-369, Sec. 522(d)(6), substituted ‘paragraph (5)(E)(i)’ for ‘paragraph (5)(D)(i)’.
Subsec. (a)(6)(D)(iii), (iv). Pub. L. 98-369, Sec. 522(d)(7), substituted ‘employee contributions (or, in the case of a partial distribution, the amount not includible in gross income)’ for ‘employee contributions’.
Subsec. (a)(6)(E)(i). Pub. L. 98-369, Sec. 522(d)(1)(C), (8), substituted ‘qualified total distribution’ for ‘qualifying rollover distribution’, and ‘paragraph (5)(D) or (5)(E)(i)(II)’ for ‘paragraph (5)(D)(i)(II)’.
Subsec. (a)(6)(F). Pub. L. 98-397, Sec. 204(c)(3), added subpar. (F).
Subsec. (a)(7). Pub. L. 98-369, Sec. 522(c), substituted provisions relating to rollover where spouse receives distributions after death of employee for provisions dealing with rollover where spouse receives lump-sum distribution at death of employee.
Subsec. (a)(9). Pub. L. 98-397, Sec. 204(c)(1), added par. (9).
Subsec. (e)(4)(L). Pub. L. 98-369, Sec. 1001(b)(3), substituted ‘6 months’ for ‘1 year’.
Subsec. (e)(4)(M). Pub. L. 98-397, Sec. 204(c)(4), added subpar. (M).
Subsec. (e)(5). Pub. L. 98-369, Sec. 491(c)(2), added par. (5).
Subsec. (f). Pub. L. 98-397, Sec. 207(a), added subsec. (f).
1983 - Subsec. (a)(5)(D)(v). Pub. L. 97-448, Sec. 103(c)(8)(A), added cl. (v).
Subsec. (e)(1)(C). Pub. L. 97-448, Sec. 101(b), substituted ‘the zero bracket amount applicable to such an individual for the taxable year’ for ‘$2,300’.
Subsec. (e)(4)(A). Pub. L. 97-448, Sec. 103(c)(7), substituted ‘this subsection, subsection (a)(2) of this section, and subsection (a)(2) of section 403’ for ‘this section and section 403’ in last sentence.
Subsec. (e)(4)(J). Pub. L. 97-448, Sec. 103(c)(12)(D), amended Pub. L. 97-34, Sec. 311(c)(2) (see 1981 Amendment note below), by substituting ‘section 72(o)(5)’ for ‘section 77(o)(5)’ in last sentence of subpar. (j).
1981 - Subsec. (a)(1). Pub. L. 97-34, Sec. 311(c)(1), inserted ‘(other than deductible employee contributions within the meaning of section 72(o)(5))’.
Pub. L. 97-34, Sec. 314(c)(1), struck out ‘or made available’ after ‘distributed’ in three places.
Subsec. (a)(5). Pub. L. 97-34, Sec. 311(b)(3)(A), inserted ‘(other than accumulated deductible employee contributions within the meaning of section 72(o)(5))’ after ‘contributions’ in subpar. (B) and added subcl. (III) in subpar. (D).
Subsec. (e)(4). Pub. L. 97-34, Sec. 311(b)(2), (c)(2), added to subpar. (A) provision that for purposes of sections 402 and 403, the balance to the credit of the employee does not include the accumulated deductible employee contributions under the plan (within the meaning of section 72(o)(5)), and added subpar. (J) provision making subpar. (J) inapplicable to distributions of accumulated deductible employee contributions (within the meaning of section 77(o)(5)). See 1983 Amendment note above.
1980 - Subsec. (a)(6)(D)(iii). Pub. L. 96-222, Sec. 101(a)(14)(E)(i), substituted ‘may designate’ for ‘many designate’.
Subsec. (a)(6)(E). Pub. L. 96-608 added subpar. (E).
Subsec. (a)(7)(A)(i). Pub. L. 96-222, Sec. 101(a)(14)(C), substituted ‘qualifying rollover distribution attributable to an employee is paid to the spouse of the employee after’ for ‘lump-sum distribution from a qualified trust is paid to the spouse of the employee on account of’.
1978 - Subsec. (a)(5). Pub. L. 95-458, Sec. 4(a), among other changes, substituted provision permitting tax-free treatment for any portion of a lump sum distribution from a qualified retirement plan which is deposited in an individual retirement account or another qualifying plan for provision which required transfer of all such property received.
Subsec. (a)(5)(D)(i)(II). Pub. L. 95-600, Sec. 157(h)(1), substituted ‘subparagraphs (B) and (H) of subsection (e)(4)’ for ‘subsection (e)(4)(B)’.
Subsec. (a)(6). Pub. L. 95-458, Sec. 4(c), in provision preceding subpar. (A) struck out ‘For purposes of paragraph (5)(A)(i)’, in subpar. (A) substituted ‘For purposes of paragraph (5)(D)(i), a complete’ for ‘A complete’, in subpar. (B) inserted ‘For purposes of paragraph (5)(D)(i) - ‘ after ‘assets. - ‘ in provision preceding cl. (i), and added subpar. (C).
Subsec. (a)(6)(D). Pub. L. 95-600, Sec. 157(f)(1), added subpar. (D).
Subsec. (a)(7). Pub. L. 95-600, Sec. 157(g)(1), added par. (7).
Subsec. (a)(8). Pub. L. 95-600, Sec. 135(b), added par. (8).
Subsec. (e)(1)(C). Pub. L. 95-600, Sec. 101(d)(1), substituted ‘$2,300’ for ‘$2,200’.
1977 - Subsec. (e)(1)(C). Pub. L. 95-30 substituted ‘amount equal to $2,200 plus one-tenth of the excess of’ for ‘amount equal to one-tenth of the excess of’ in provisions preceding cl. (i).
1976 - Subsec. (a)(1). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’.
Subsec. (a)(2). Pub. L. 94-455, Sec. 1402(b)(2), provided that ‘9 months’ would be changed to ‘1 year’.
Pub. L. 94-455, Sec. 1402(b)(1)(C), 1906(b)(13)(A), provided that ‘6 months’ would be changed to ‘9 months’ for taxable years beginning in 1977 and struck out ‘or his delegate’ after ‘Secretary’.
Subsec. (a)(4). Pub. L. 94-455, Sec. 1901(a)(57)(A), substituted ‘basic pay’ for ‘basic salary’, ‘civil service retirement laws’ for ‘Civil Service Retirement Act (5 U.S.C. 2251)', and ‘section 8331(3) of title 5, United States Code’ for ‘section 1(d) of such Act’.
Subsec. (a)(5). Pub. L. 94-267, Sec. 1(a)(2), substituted ‘a payment’ for ‘the lump-sum distribution’.
Subsec. (a)(5)(A). Pub. L. 94-267, Sec. 1(a)(1), restructured provision by adding cl. (i) and designating existing provision as cl. (ii).
Subsec. (a)(6). Pub. L. 94-267, Sec. 1(a)(3), added par. (6).
Subsec. (a)(6)(A). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’.
Subsec. (d). Pub. L. 94-455, Sec. 1901(a)(57)(B), struck out subsec. (d) which related to certain trust agreements made before Oct. 21, 1942.
Subsec. (e)(2). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’.
Subsec. (e)(4)(A). Pub. L. 94-455, Sec. 1901(a)(57)(C)(i), substituted ‘Except for purposes of subsection (a)(2) and section 403(a)(2)’ for ‘For purposes of this subparagraph’.
Subsec. (e)(4)(B), (J). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’.
Subsec. (e)(4)(L). Pub. L. 94-455, Sec. 1402(b)(2), substituted ‘1 year’ for ‘9 months’.
Pub. L. 94-455, Sec. 1402(b)(1)(C), 1512(a), added subsec. (e)(4)(L) to be applicable to distributions and payments after Dec. 31, 1975, in taxable years beginning after Dec. 31, 1975, and provided that ‘6 months’ would be changed to ‘9 months’ for taxable years beginning in 1977.
1974 - Subsec. (a)(2). Pub. L. 93-406, Sec. 2005(b)(1), substituted provisions covering capital gains treatment of portions of lump sum distributions determined through the application of a fraction formula susceptible of producing a phaseout of capital gains treatment for provisions covering capital gains treatment of portions of lump sum distributions determined on a fixed formula.
Subsec. (a)(3)(C). Pub. L. 93-406, Sec. 2005(c)(1), struck out subsec. (a)(3)(C) which defined ‘total distribution payable’.
Subsec. (a)(5). Pub. L. 93-406, Sec. 2002(g)(5), 2005(c)(2), substituted provisions covering rollover amounts for provisions covering limitation on capital gains treatment.
Subsec. (e). Pub. L. 93-406, Sec. 2005(a), substituted provisions covering tax on lump sum distributions for provisions covering plan termination distributions made after Dec. 31, 1953, and before Jan. 1, 1955.
1969 - Subsec. (a)(5). Pub. L. 91-172, Sec. 515(a)(1), added par. (5).
Subsec. (b). Pub. L. 91-172, Sec. 321(b)(1), substituted provision for inclusion of contributions made by an employer to a nonexempt trust in the ‘gross income of the employee in accordance with section 83 (relating to property transferred in connection with performance of services), except that the value of the employee's interest in the trust shall be substituted for the fair market value of the property for purposes of applying such section' for prior provision for inclusion in the ‘gross income of an employee for the taxable year in which the contribution is made to the trust in the case of an employee whose beneficial interest in such contribution is nonforfeitable at the time the contribution is made’, and provided that distributions of income of such trust before the annuity starting date (as defined in section 72(c)(4)) shall be included in the gross income of the employee without regard to section 72(e)(1) (relating to amount not received as annuities) and that a beneficiary of any such trust shall not be considered the owner of any portion of such trust under subpart E of part I of subch. J (relating to grantors and others treated as substantial owners).
1964 - Subsec. (a)(1). Pub. L. 88-272, Sec. 232(e)(1), struck out ‘except that section 72(e)(3) shall not apply’ after ‘(relating to annuities)’.
Subsec. (a)(3)(B). Pub. L. 88-272, Sec. 221(c)(1), substituted ‘subsections (e) and (f) of section 425’ for ‘section 421(d)(2) and (3)’.
Subsecs. (b), (d). Pub. L. 88-272, Sec. 232(e)(2), (3), struck out ‘except that section 72(e)(3) shall not apply’ after ‘(relating to annuities)’.
1962 - Subsec. (a)(2). Pub. L. 87-792 inserted sentence providing that this paragraph shall not apply to distributions paid to any distributee to the extent such distributions are attributable to contributions made on behalf of the employee while he was an employee within the meaning of section 401(c)(1).
1960 - Subsec. (a)(1). Pub. L. 86-437, Sec. 2(a), substituted ‘paragraphs (2) and (4)’ for ‘paragraph (2)’.
Subsec. (a)(4). Pub. L. 86-437, Sec. 1, added par. (4).
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L. 115-141, Div. U, Sec. 401(a)(73), effective March 23, 2018.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments by Pub. L. 115-97, Sec. 13613, effective for plan loan offset amounts which are treated as distributed in taxable years beginning after December 31, 2017.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendment by Pub. L. 113-295, Div. A, Sec. 221(a)(57)(A), effective on the date of the enactment of this Act [Enacted: Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2) SAVINGS PROVISION.—If—
“(A) any provision amended or repealed by the amendments made by this section applied to—
“(i) any transaction occurring before the date of the enactment of this Act [Enacted: Dec. 19, 2014],
“(ii) any property acquired before such date of enactment, or
“(iii) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
“(B) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by this section) affect the liability for tax for periods ending after date of enactment, nothing in the amendments or repeals made by this section shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.”
EFFECTIVE DATE OF 2013 AMENDMENTS
Section 1086(d) of Pub. L. 112-239 provided:
“(d) EFFECTIVE DATE.—
“(1) IN GENERAL.—Except as provided in paragraph (1), the amendments made by this section shall—
“(A) take effect on the date of enactment of this Act; and
“(B) apply to any matter pending, before the Bureau of Justice Assistance or otherwise, on the date of enactment of this Act, or filed or accruing after that date.
“(2) EXCEPTIONS.—
“(A) RESCUE SQUADS AND AMBULANCE CREWS.—For a member of a rescue squad or ambulance crew (as defined in section 1204(7) of title I of the Omnibus Crime Control and Safe Streets Act of 1968, as amended by this section), the amendments made by this Act shall apply to injuries sustained on or after June 1, 2009.
“(B) HEART ATTACKS, STROKES, AND VASCULAR RUPTURES.—Section 1201(k) of title I of the Omnibus Crime Control and Safe Streets Act of 1968, as amended by this section, shall apply to heart attacks, strokes, and vascular ruptures sustained on or after December 15, 2003.”
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by section 108f)(1) of Pub. L. 110-458 effective as if included in the provisions of the Pension Protection Act of 2006 [Pub. L. 109-280, Sec. 829] to which they relate.
Amendments by section 108(f)(2) of Pub. L. 110-458 effective with respect to plan years beginning after December 31, 2009.
Amendments by section 108(j) of Pub. L. 110-458 effective as if included in the provisions of the Pension Protection Act of 2006 [Pub. L. 109-280, Sec. 845] to which they relate.
Amendment by section 109(b)(3) of Pub. L. 110-458 effective as if included in the provisions of the Pension Protection Act of 2006 [Pub. L. 109-280, Sec. 902] to which they relate.
Amendment by section 201(b) of Pub. L. 110-458 effective for calendar years beginning after December 31, 2008.
EFFECTIVE DATE OF 2007 AMENDMENTS
Amendment by section 8(a)(1) of Pub. L. 110-172 effective as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 617] to which it relates.
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendment by section 822(a) of Pub. L. 109-280 applicable to taxable years beginning after December 31, 2006.
Amendment by section 829(a)(1) of Pub. L. 109-280 applicable to distributions after December 31, 2006.
Amendment by section 845(a) of Pub. L. 109-280 applicable to distributions in taxable years beginning after December 31, 2006.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by section 407(a) of Pub. L. 109-135 applicable as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 617] to which they relate.
EFFECTIVE DATE OF 2002 AMENDMENTS
Amendments by section 411(l) of Pub. L. 107-147 applicable as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 614, 616] to which they relate.
Amendments by section 411(o) of Pub. L. 107-147 applicable as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 631] to which they relate.
Amendments by section 411(p) of Pub. L. 107-147 applicable as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 632] to which they relate.
Amendments by section 411(q) of Pub. L. 107-147 applicable as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 643] to which they relate.
EFFECTIVE DATE OF 2001 AMENDMENTS
Amendments by section 611(d) of Pub. L. 107-16 applicable to years beginning after December 31, 2001. Sec. 611(i) of Pub. L. 107-16, as added by Pub. L. 107-147, Sec. 411(j)(3), provided the following special rule:
“(3) Special rule.--In the case of plan that, on June 7, 2001, incorporated by reference the limitation of section 415(b)(1)(A) of the Internal Revenue Code of 1986, section 411(d)(6) of such Code and section 204(g)(1) of the Employee Retirement Income Security Act of 1974 do not apply to a plan amendment that--
“(A) is adopted on or before June 30, 2002,
“(B) reduces benefits to the level that would have applied without regard to the amendments made by subsection (a) of this section, and
“(C) is effective no earlier than the years described in paragraph (2).”
Amendment by section 617(c) of Pub. L. 107-16 applicable to taxable years beginning after December 31, 2005.
Amendment by section 632(a) of Pub. L. 107-16 applicable to years beginning after December 31, 2001.
Amendment by section 636(b)(1) of Pub. L. 107-16 applicable to distributions made after December 31, 2001.
Amendments by section 641 of Pub. L. 107-16 applicable to distributions after December 31, 2001. Sec. 641(f)(2)-(3) provided the following special rules:
“(2) REASONABLE NOTICE.--No penalty shall be imposed on a plan for the failure to provide the information required by the amendment made by subsection (c) with respect to any distribution made before the date that is 90 days after the date on which the Secretary of the Treasury issues a safe harbor rollover notice after the date of the enactment of this Act, if the administrator of such plan makes a reasonable attempt to comply with such requirement.
“(3) SPECIAL RULE.--Notwithstanding any other provision of law, subsections (h)(3) and (h)(5) of section 1122 of the Tax Reform Act of 1986 shall not apply to any distribution from an eligible retirement plan (as defined in clause (iii) or (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 1986) on behalf of an individual if there was a rollover to such plan on behalf of such individual which is permitted solely by reason of any amendment made by this section.”
Amendments by section 643(a) of Pub. L. 107-16 applicable to distributions made after December 31, 2001.
Amendments by section 644(a) of Pub. L. 107-16 applicable to distributions after December 31, 2001.
Amendments by section 657(b) of Pub. L. 107-16 applicable to distributions made after final regulations implementing subsection (c)(2)(A) [of this Act] are prescribed [Effective date: Mar. 28, 2005].
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358, provided that:
“(a) IN GENERAL.--All provisions of, and amendments made by, this Act shall not apply--
“(1) to taxable, plan, or limitation years beginning after December 31, 2010, or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation skipping transfers, after December 31, 2010.
“(b) APPLICATION OF CERTAIN LAWS.--The Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 shall be applied and administered to years, estates, gifts, and transfers described in subsection (a) as if the provisions and amendments described in subsection (a) had never been enacted.
“(c) EXCEPTION.-Subsection (a) shall not apply to section 803 (relating to no federal income tax on restitution received by victims of the Nazi regime or their heirs or estates).”
PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 MADE PERMANENT
Section 811 of Pub. L. 109-280 provided that:
“Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16] shall not apply to the provisions of, and amendments made by, subtitles A through F [Sections 601-666] of title VI of such Act (relating to pension and individual retirement arrangement provisions).”
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendments by section 6005(c)(2) of Pub. L. 105-206 applicable to distributions after December 31, 1998.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment by section 1501(a) of Pub. L. 105-34 applicable to years beginning after December 31, 1997.
EFFECTIVE DATE OF 1996 AMENDMENTS
Amendments by section 1401 of Pub. L. 104-188, generally effective for taxable years beginning after December 31, 1999. However, Sec. 1401(c)(2) provided the following transition rules:
“(2) Retention of certain transition rules.--The amendments made by this section shall not apply to any distribution for which the taxpayer is eligible to elect the benefits of section 1122(h)(3) or (h)(5) of the Tax Reform Act of 1986. Notwithstanding the preceding sentence, individuals who elect such benefits after December 31, 1999, shall not be eligible for 5-year averaging under section 402(d) of the Internal Revenue Code of 1986 (as in effect immediately before such amendments).”
Amendments by Sec. 1450(a)(2) of Pub. L. 104-188, effective for taxable years beginning after December 31, 1995.
Amendments by Sec. 1421(b) of Pub. L. 104-188, effective for taxable years beginning after December 31, 1996.
EFFECTIVE DATE OF 1994 AMENDMENTS
Amendment by section 732 of Pub. L. 103-465, effective for years beginning after December 31, 1994, except in the following cases:
“Rounding not to result in decreases.--The amendments made by this section providing for the rounding of indexed amounts shall not apply to any year to the extent the rounding would require the indexed amount to be reduced below the amount in effect for years beginning in 1994.”
EFFECTIVE DATE OF 1992 AMENDMENTS
Amendment by section 521 of Pub. L. 102-318 effective for distributions after December 31, 1992. Sec. 521(e)(2) of Pub. L. 102-318 provided the following special rule:
“(2) Special Rule for Partial Distributions.-For purposes of section 402(a)(5)(D)(i)(II) of the Internal Revenue Codeof 1986 (as in effect before the amendments made by this section), a distribution before January 1, 1993, which is made before or at the same time as a series of periodic payments shall not be treated as one of such series if it is not substantially equal in amount to other payments in such series.
Amendment by section 522(c)(1) of Pub. L. 102-318 effective for distributions after December 31, 1992.
EFFECTIVE DATE OF 1989 AMENDMENTS
Section 7811(i)(13) of Pub. L. 101-239 provided that the amendment made by that section is effective with respect to taxable years ending after Dec. 19, 1989 (or, at the election of the taxpayer, beginning after Dec. 31, 1986).
Amendment by section 7811(g)(2) of Pub. L. 101-239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such amendment relates, see section 7817 of Pub. L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENTS
Amendment by sections 1011(c)(1)-(6)(B), (11), (h)(4), 1011A(a)(1), (b)(4)(A)-(D), (5)-(8), (10), (c)(9), and 1018(t)(8)(A), (C), (u)(1), (6), (7) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
Section 6068(b) of Pub. L. 100-647 provided that: ‘The amendment made by this section (amending this section) shall apply to taxable years ending after December 31, 1984.’
EFFECTIVE DATE OF 1986 AMENDMENTS
Amendment by section 104(b)(5) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out as a note under section 1 of this title.
Section 1105(c) of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, Sec. 1011(c)(8), (9), Nov. 10, 1988, 102 Stat. 3458, provided that:
‘(1) In general. - Except as provided in this subsection, the amendment made by subsection (a) (amending this section) shall apply to taxable years beginning after December 31, 1986.
‘(2) Deferrals under collective bargaining agreements. - In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before March 1, 1986, the amendment made by subsection (a) shall not apply to contributions made pursuant to such an agreement for taxable years beginning before the earlier of -
‘(A) the date on which such agreement terminates (determined without regard to any extension thereof after February 28, 1986), or
‘(B) January 1, 1989.
Such contributions shall be taken into account for purposes of applying the amendment made by this section to other plans.
‘(3) Distributions made before plan amendment. -
‘(A) In general. - If a plan amendment is required to allow the plan to make any distribution described in section 402(g)(2)(A)(ii) of the Internal Revenue Code of 1986, any such distribution which is made before the close of the 1st plan year for which such amendment is required to be in effect under section 1140 (set out as a note under section 401 of this title) shall be treated as made in accordance with the provisions of such plan.
‘(B) Distributions pursuant to model amendment. -
‘(i) Secretary to prescribe amendment. - The Secretary of the Treasury or his delegate shall prescribe an amendment which allows a plan to make any distribution described in section 402(g)(2)(A)(ii) of such Code.
‘(ii) Adoption by plan. - If a plan adopts the amendment prescribed under clause (i) and makes a distribution in accordance with such amendment, such distribution shall be treated as made in accordance with the provisions of the plan.
‘(4) Special rule for taxable years of partnerships which include january 1, 1987. - In the case of the taxable year of any partnership which begins before January 1, 1987, and ends after January 1, 1987, elective deferrals (within the meaning of section 402(g)(3) of the Internal Revenue Code of 1986) made on behalf of a partner for such taxable year shall, for purposes of section 402(g)(3) of such Code, be treated as having been made ratably during such taxable year.
‘(5) Cash or deferred arrangements. - The amendments made by this section (amending sections 402 and 6051 of this title) shall not apply to employer contributions made during 1987 and attributable to services performed during 1986 under a qualified cash or deferred arrangement (as defined in section 401(k) of the Internal Revenue Code of 1986) if, under the terms of such arrangement as in effect on August 16, 1986 -
‘(A) the employee makes an election with respect to such contribution before January 1, 1987, and
‘(B) the employer identifies the amount of such contribution before January 1, 1987.
‘(6) Reporting requirements. - The amendments made by subsection (b) (amending section 6051 of this title) shall apply to calendar years beginning after December 31, 1986.’
Amendment by section 1106(c)(2) of Pub. L. 99-514 applicable to years beginning after Dec. 31, 1986, see section 1106(i) of Pub. L. 99-514, set out as a note under section 415 of this title.
Amendment by section 1108(b) of Pub. L. 99-514 applicable to years beginning after Dec. 31, 1986, see section 1108(h) of Pub. L. 99-514, set out as a note under section 219 of this title.
Amendment by section 1112(c) of Pub. L. 99-514 applicable to plan years beginning after Dec. 31, 1988, with special rule regarding collective bargaining agreements ratified before Mar. 1, 1986, and with provision for waiver of excise tax on reversions, see section 1112(e) of Pub. L. 99-514, set out as a note under section 401 of this title.
Amendment by section 1121(c)(1) of Pub. L. 99-514 applicable to years beginning after Dec. 31, 1986, with special provisions for plans maintained pursuant to collective bargaining agreements ratified before Mar. 1, 1986, and transition rules, see section 1121(d) of Pub. L. 99-514, set out as a note under section 401 of this title.
Section 1122(h) of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, Sec. 1011A(b)(11)-(15), Nov. 10, 1988, 102 Stat. 3474, 3475, provided that:
‘(1) In general. - Except as otherwise provided in this subsection, the amendments made by this section (amending sections 72, 402, 403, and 408 of this title) shall apply to amounts distributed after December 31, 1986, in taxable years ending after such date.
‘(2) Subsection (c). -
‘(A) Subsection (c)(1). - The amendment made by subsection (c)(1) (amending section 72 of this title) shall apply to individuals whose annuity starting date is after July 1, 1986.
‘(B) Subsection (c)(2). - The amendment made by subsection (c)(2) (amending section 72 of this title) shall apply to individuals whose annuity starting date is after December 31, 1986, except that section 72(b)(3) of the Internal Revenue Codeof 1986 (as added by such subsection) shall apply to individuals whose annuity starting date is after July 1, 1986.
‘(C) Special rule for amounts not received as annuities. - In the case of any plan not described in section 72(e)(8)(D) of the Internal Revenue Code of 1986 (as added by subsection (c)(3)), the amendments made by subsection (c)(3) (amending section 72 of this title) shall apply to amounts received after July 1, 1986.
‘(3) Special rule for individuals who attained age 50 before january 1, 1986. -
‘(A) In general. - In the case of a lump sum distribution to which this paragraph applies -
‘(i) the existing capital gains provisions shall continue to apply, and
‘(ii) the requirement of subparagraph (B) of section 402(e)(4) of the Internal Revenue Code of 1986 (as amended by subsection (a)) that the distribution be received after attaining age 59 1/2 shall not apply.
‘(B) Computation of tax. - If subparagraph (A) applies to any lump sum distribution of any taxpayer for any taxable year, the tax imposed by section 1 of the Internal Revenue Code of 1986 on such taxpayer for such taxable year shall be equal to the sum of
‘(i) the tax imposed by such section 1 on the taxable income of the taxpayer (reduced by the portion of such lump sum distribution to which clause (ii) applies), plus
‘(ii) 20 percent of the portion of such lump sum distribution to which the existing capital gains provisions continue to apply by reason of this paragraph.
‘(C) Lump sum distributions to which paragraph applies. - This paragraph shall apply to any lump sum distribution if -
‘(i) such lump sum distribution is received by an employee who has attained age 50 before January 1, 1986 or by an individual, estate, or trust with respect to such an employee, and
‘(ii) the taxpayer makes an election under this paragraph.
Not more than 1 election may be made under this paragraph with respect to an employee. An election under this subparagraph shall be treated as an election under section 402(e)(4)(B) of such Code for purposes of such Code.
‘(4) 5-year phase-out of capital gains treatment. -
‘(A) Notwithstanding the amendment made by subsection (b) (amending this section and section 403 of this title), if the taxpayer elects the application of this paragraph with respect to any distribution after December 31, 1986, and before January 1, 1992, the phase-out percentage of the amount which would have been treated, without regard to this subparagraph, as long-term capital gain under the existing capital gains provisions shall be treated as long-term capital gain.
‘(B) For purposes of this paragraph -
 

 --------------------------------------------------------------------- 
 ---------------------------------------------------------------------
‘In the case of distributions      The phase-out 
        during calendar year:      percentage is: 
                1987               100 
                1988                95 
                1989                75 
                1990                50 
                1991                25. 
           -------------------------------
‘(C) No more than 1 election may be made under this paragraph with respect to an employee. An election under this paragraph shall be treated as an election under section 402(e)(4)(B) of the Internal Revenue Code of 1986 for purposes of such Code.
‘(5) Election of 10-year averaging. - An employee who has attained age 50 before January 1, 1986, and elects the application of paragraph (3) or section 402(e)(1) of the Internal Revenue Codeof 1986 (as amended by this Act) may elect to have such section applied by substituting ‘10 times’ for ‘5 times’ and ‘ 1/10’ for ‘ 1/5’ in subparagraph (B) thereof. For purposes of the preceding sentence, section 402(e)(1) of such Code shall be applied by using the rate of tax in effect under section 1 of the Internal Revenue Code of 1954 for taxable years beginning during 1986 and by including in gross income the zero bracket amount in effect under section 63(d) of such Code for such years. This paragraph shall also apply to an individual, estate, or trust which receives a distribution with respect to an employee described in this paragraph.
‘(6) Existing capital gain provisions. - For purposes of paragraphs (3) and (4), the term ‘existing capital gains provisions’ means the provisions of paragraph (2) of section 402(a) of the Internal Revenue Code of 1954 (as in effect on the day before the date of the enactment of this Act (Oct. 22, 1986)) and paragraph (2) of section 403(a) of such Code (as so in effect).
‘(7) Subsection (d). - The amendments made by subsection (d) (amending section 403 of this title) shall apply to taxable years beginning after December 31, 1985.
‘(8) Frozen deposits. - The amendments made by subsection (e)(2) (amending this section and section 408 of this title) shall apply to amounts transferred to an employee before, on, or after the date of the enactment of this Act (Oct. 22, 1986), except that in the case of an amount transferred on or before such date, the 60-day period referred to in section 402(a)(5)(C) of the Internal Revenue Code of 1986 shall not expire before the 60th day after the date of the enactment of this Act.
‘(9) Special rule for state plans. - In the case of a plan maintained by a State which on May 5, 1986, permitted withdrawal by the employee of employee contributions (other than as an annuity), section 72(e) of the Internal Revenue Code of 1986 shall be applied -
‘(A) without regard to the phrase ‘before separation from service’ in paragraph (8)(D), and
‘(B) by treating any amount received (other than as an annuity) before or with the 1st annuity payment as having been received before the annuity starting date.’
Amendment by section 1852(a)(5)(A), (b)(1)-(7), (c)(5) of Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
Section 1854(f)(4)(C) of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, Sec. 1011(c)(6)(C), Nov. 10, 1988, 102 Stat. 3458, provided that: ‘The amendments made by paragraph (2) (amending this section) shall apply to any transaction occurring after December 31, 1984, except that in the case of any transaction occurring before the date of the enactment of this Act (Oct. 22, 1986), the period under which proceeds are required to be invested under section 402(j) of the Internal Revenue Code of 1954 (now 1986) (as added by paragraph (2)) shall not end before the earlier of 1 year after the date of such transaction or 180 days after the date of the enactment of this Act.'
Section 1875(c)(1)(B) of Pub. L. 99-514 provided that: ‘The amendments made by subparagraph (A) (amending this section) shall apply to distributions after the date of the enactment of this Act (Oct. 22, 1986). Such amendments shall apply also to distributions after 1983 and on or before the date of the enactment of this Act to individuals who are not 5-percent owners (as defined in section 402(a)(5)(F)(ii) of the Internal Revenue Code of 1954 (now 1986) (as amended by this paragraph)).'
Amendment by section 1898(a)(2), (3), (c)(7)(A)(i), (e) of Pub. L. 99-514 effective as if included in the provision of the Retirement Equity Act of 1984, Pub. L. 98-397, to which such amendment relates, except as otherwise provided, see section 1898(j) of Pub. L. 99-514, set out as a note under section 401 of this title.
Amendment by section 1898(c)(1)(A) of Pub. L. 99-514 applicable to payments made after Oct. 22, 1986, see section 1898(c)(1)(C) of Pub. L. 99-514, set out as a note under section 72 of this title.
Amendment by Pub. L. 99-272 effective Jan. 1, 1986, with certain exceptions, see section 11019 of Pub. L. 99-272, set out as a note under section 1341 of Title 29, Labor.
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by section 204 of Pub. L. 98-397 effective Jan. 1, 1985, and amendment by section 207 of Pub. L. 98-397 applicable to plan years beginning after Dec. 31, 1984, except as otherwise provided, see sections 302 and 303 of Pub. L. 98-397, set out as a note under section 1001 of Title 29, Labor.
Amendment by section 491(d)(9)-(11) of Pub. L. 98-369 applicable to obligations issued after Dec. 31, 1983, see section 491(f)(1) of Pub. L. 98-369, set out as a note under section 62 of this title.
Section 491(f)(2) of Pub. L. 98-369 provided that: ‘The amendment made by subsection (c) (amending this section and section 405 of this title) shall apply to redemptions after the date of the enactment of this Act (July 18, 1984) in taxable years ending after such date.’
Section 522(e) of Pub. L. 98-369, as amended by Pub. L. 99-514, title XVIII, Sec. 1852(b)(9), Oct. 22, 1986, 100 Stat. 2867, provided that: ‘The amendments made by this section (amending this section and sections 403, 408, and 409 of this title) shall apply to distributions made after the date of the enactment of this Act (July 18, 1984), in taxable years ending after such date.
Section 713(c)(4) of Pub. L. 98-369, as added by Pub. L. 99-514, title XVIII, Sec. 1875(c)(2), Oct. 22, 1986, 100 Stat. 2894, provided that: ‘The amendment made by paragraph (3) (amending this section) shall apply to distributions after July 18, 1984.’
Amendment by section 1001(b)(3) of Pub. L. 98-369 applicable to property acquired after June 22, 1984, and before Jan. 1, 1988, see section 1001(e) of Pub. L. 98-369, set out as a note under section 166 of this title.
EFFECTIVE DATE OF 1983 AMENDMENTS
Amendment by Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENTS
Amendment by section 311(b)(2), (3)(A), (c) of Pub. L. 97-34, applicable to taxable years beginning after Dec. 31, 1981, see section 311(i)(1) of Pub. L. 97-34, set out as a note under section 219 of this title.
Section 314(c)(2) of Pub. L. 97-34 provided that: ‘The amendment made by paragraph (1) (amending this section) shall apply to taxable years beginning after December 31, 1981.’
EFFECTIVE DATE OF 1980 AMENDMENTS
Section 2(b) of Pub. L. 96-608, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. - The amendment made by subsection (a) (amending this section) shall apply to payments made in taxable years beginning after December 31, 1978.
‘(2) Transitional rule. - In the case of any payment made before January 1, 1982, in a taxable year beginning after December 31, 1978, which is treated as a qualifying rollover distribution (as defined in section 402(a)(5)(D)(i) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) by reason of the amendment made by subsection (a), the applicable period specified in section 402(a)(5)(C) of such Code shall not expire before the close of December 31, 1981.'
Amendment by Pub. L. 96-222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95-600, to which such amendment relates, see section 201 of Pub. L. 96-222, set out as a note under section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENTS
Amendment by section 101(d) of Pub. L. 95-600 effective with respect to taxable years beginning after Dec. 31, 1978, see section 101(f)(1) of Pub. L. 95-600, set out as a note under section 1 of this title.
Amendment by section 135(b) of Pub. L. 95-600 applicable to plan years beginning after December 31, 1979, see section 135(c)(1) of Pub. L. 95-600, set out as a note under section 401 of this title.
Section 157(h)(3)(A) of Pub. L. 95-600, as amended by Pub. L. 96-222, title I, Sec. 101(a)(14)(A), Apr. 1, 1980, 94 Stat. 204, provided that: ‘The amendments made by this subsection (amending this section and section 408 of this title) shall apply to payments made in taxable years beginning after December 31, 1977.’
Section 157(f)(2) of Pub. L. 95-600, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendment made by paragraph (1) (amending this section) shall apply to qualifying rollover distributions (as defined in section 402(a)(5)(D)(i) of the Internal Revenue Codeof 1986 (formerly I.R.C. 1954)) completed after December 31, 1978, in taxable years ending after such date.'
Section 157(g)(4) of Pub. L. 95-600 provided that: ‘The amendments made by this subsection (amending this section and sections 403 and 408 of this title) shall apply to lump-sum distributions completed after December 31, 1978, in taxable years ending after such date.’
EFFECTIVE DATE OF 1978 AMENDMENT; CERTAIN ROLLOVERS VALIDATED
Section 4(d) of Pub. L. 95-458, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. - The amendments made by subsections (a), (b), and (c) (amending this section and section 403 of this title) shall apply with respect to taxable years beginning after December 31, 1974.
‘(2) Validation of certain attempted rollovers. - If the taxpayer -
‘(A) attempted to comply with the requirements of section 402(a)(5) or 403(a)(4) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) for a taxable year beginning before the date of the enactment of this Act, (Oct. 14, 1978), and
‘(B) failed to meet the requirements of such section that all property received in the distribution be transferred, such section (as amended by this section) shall be applied by treating any transfer of property made on or before December 31, 1978, as if it were made on or before the 60th day after the day on which the taxpayer received such property. For purposes of the preceding sentence, a transfer of money shall be treated as a transfer of property received in a distribution to the extent that the amount of the money transferred does not exceed the highest fair market value of the property distributed during the 60-day period beginning on the date on which the taxpayer received such property.’
EFFECTIVE DATE OF 1977 AMENDMENTS
Amendment by Pub. L. 95-30 applicable to taxable years beginning after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENTS
Section 1402(b)(1) of Pub. L. 94-455 provided that the amendment made by that section is effective with respect to taxable years beginning in 1977.
Section 1402(b)(2) of Pub. L. 94-455 provided that the amendment made by that section is effective with respect to taxable years beginning after Dec. 31, 1977.
Section 1512(b) of Pub. L. 94-455 provided that: ‘The amendment made by this section (amending this section) shall apply to distributions and payments made after December 31, 1975, in taxable years beginning after such date.’
Section 1901(a)(57)(C)(ii) of Pub. L. 94-455 provided that: ‘The amendment made by clause (i) (amending this section) shall apply with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date.’
Amendment by Pub. L. 94-267 applicable with respect to payments made to an employee on or after July 4, 1974, see section 1(e) of Pub. L. 94-267, set out as a note under section 401 of this title.
EFFECTIVE DATE OF 1974 AMENDMENTS
Section 2002(i)(3) of Pub. L. 93-406, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendments made by subsection (g)(5) and (6) (amending this section and section 403 of this title) shall apply on and after the date of enactment of this Act (Sept. 2, 1974) with respect to contributions to an employees’ trust described in section 401(a) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) which is exempt from tax under section 501(a) of such Code or an annuity plan described in section 403(a) of such Code.'
Section 2005(d) of Pub. L. 93-406 provided that: ‘The amendments made by this section (amending this section and sections 46, 50A, 56, 62, 72, 101, 122, 403, 405, 406, 407, 871, 877, 901, 1304, and 1348 of this title) shall apply only with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date.’
EFFECTIVE DATE OF 1969 AMENDMENTS
Amendment by section 321(b)(1) of Pub. L. 91-172 applicable with respect to contributions made and premiums paid after Aug. 1, 1969, see section 321(d) of Pub. L. 91-172, set out as an Effective Date note under section 83 of this title.
Section 515(d) of Pub. L. 91-172 provided that: ‘The amendments made by this section (amending this section and sections 72, 403, 405, 406, 407 and 1304 of this title) shall apply to taxable years ending after December 31, 1969.’
EFFECTIVE DATE OF 1964 AMENDMENTS
Amendment by section 221(c)(1) of Pub. L. 88-272 applicable to taxable years ending after Dec. 31, 1963, see section 221(e) of Pub. L. 88-272, set out as a note under section 421 of this title.
Amendment by section 232(e)(1)-(3) of Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 232(g) of Pub. L. 88-272, set out as a note under section 5 of this title.
EFFECTIVE DATE OF 1962 AMENDMENTS
Amendment by Pub. L. 87-792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note under section 22 of this title.
EFFECTIVE DATE OF 1960 AMENDMENTS
Section 3 of Pub. L. 86-437 provided that: ‘The amendments made by this Act (amending this section and section 871 of this title) shall apply only with respect to taxable years beginning after December 31, 1959.’
RELIEF FOR 2016 DISASTER AREAS
Section 11028 of Pub. L. 115-97 provided that:
“(a) IN GENERAL.—For purposes of this section, the term ‘2016 disaster area’ means any area with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act during calendar year 2016.
“(b) SPECIAL RULES FOR USE OF RETIREMENT FUNDS WITH RESPECT TO AREAS DAMAGED BY 2016 DISASTERS.—
“(1) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.—
“(A) IN GENERAL.—Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified 2016 disaster distribution.
“(B) AGGREGATE DOLLAR LIMITATION.—
“(i) IN GENERAL.—For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified 2016 disaster distributions for any taxable year shall not exceed the excess (if any) of—
“(I) $100,000, over (II) the aggregate amounts treated as qualified 2016 disaster distributions received by such individual for all prior taxable years.
“(ii) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution to an individual would (without regard to clause (i)) be a qualified 2016 disaster distribution, a plan shall not be treated as violating any requirement of this title merely because the plan treats such dis- tribution as a qualified 2016 disaster distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.
“(iii) CONTROLLED GROUP.—For purposes of clause (ii), the term ‘controlled group’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.
“(C) AMOUNT DISTRIBUTED MAY BE REPAID.—
“(i) IN GENERAL.—Any individual who receives a qualified 2016 disaster distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of the Internal Revenue Code of 1986, as the case may be.
“(ii) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.— For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to clause (i) with respect to a qualified 2016 disaster distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified 2016 disaster distribution in an eligible rollover distribution (as defined in section 402(c)(4) of the Internal Revenue Code of 1986) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(iii) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS.—For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to clause (i) with respect to a qualified 2016 disaster distribution from an individual retirement plan (as defined by section 7701(a)(37) of the Internal Revenue Code of 1986), then, to the extent of the amount of the contribution, the qualified 2016 disaster distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(D) DEFINITIONS.—For purposes of this paragraph—
“(i) QUALIFIED 2016 DISASTER DISTRIBUTION.—Except as provided in subparagraph (B), the term ‘‘qualified 2016 disaster distribution’’ means any distribution from an eligible retirement plan made on or after January 1, 2016, and before January 1, 2018, to an individual whose principal place of abode at any time during calendar year 2016 was located in a disaster area described in subsection (a) and who has sustained an economic loss by reason of the events giving rise to the Presidential declaration described in subsection (a) which was applicable to such area.
“(ii) ELIGIBLE RETIREMENT PLAN.—The term ‘eligible retirement plan’ shall have the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986.
“(E) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.—
“(i) IN GENERAL.—In the case of any qualified 2016 disaster distribution, unless the taxpayer elects not to have this subparagraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year.
“(ii) SPECIAL RULE.—For purposes of clause (i), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply.
“(F) SPECIAL RULES.—
“(i) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES.—For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified 2016 disaster distribution shall not be treated as eligible rollover distributions.
“(ii) QUALIFIED 2016 DISASTER DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION REQUIREMENTS.—For purposes of the Internal Revenue Code of 1986, a qualified 2016 disaster distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of the Internal Revenue Code of 1986. (2) PROVISIONS RELATING TO PLAN AMENDMENTS.—
“(A) IN GENERAL.—If this paragraph applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subparagraph (B)(ii)(I).
“(B) AMENDMENTS TO WHICH SUBSECTION APPLIES.—
“(i) IN GENERAL.—This paragraph shall apply to any amendment to any plan or annuity contract which is made—
“(I) pursuant to any provision of this section, or pursuant to any regulation under any provision of this section, and
“(II) on or before the last day of the first plan year beginning on or after January 1, 2018, or such later date as the Secretary prescribes. In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), subclause (II) shall be applied by substituting the date which is 2 years after the date otherwise applied under subclause (II).
“(ii) CONDITIONS.—This paragraph shall not apply to any amendment to a plan or contract unless such amendment applies retroactively for such period, and shall not apply to any such amendment unless the plan or contract is operated as if such amendment were in effect during the period—
“(I) beginning on the date that this section or the regulation described in clause (i)(I) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and
“(II) ending on the date described in clause (i)(II) (or, if earlier, the date the plan or contract amendment is adopted).
“(c) SPECIAL RULES FOR PERSONAL CASUALTY LOSSES RELATED TO 2016 MAJOR DISASTER.—
“(1) IN GENERAL.—If an individual has a net disaster loss for any taxable year beginning after December 31, 2015, and before January 1, 2018—
“(A) the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of—
“(i) such net disaster loss, and
“(ii) so much of the excess referred to in the matter preceding clause (i) of section 165(h)(2)(A) of such Code (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual,
“(B) section 165(h)(1) of such Code shall be applied by substituting ‘$500’ for ‘$500 ($100 for taxable years beginning after December 31, 2009)’,
“(C) the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss,
“(D) section 56(b)(1)(E) of such Code shall not apply to so much of the standard deduction as is attributable to the increase under subparagraph (C) of this paragraph.
“(2) NET DISASTER LOSS.—For purposes of this subsection, the term ‘net disaster loss’ means the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in section 165(h)(3)(A) of the Internal Revenue Code of 1986).
“(3) QUALIFIED DISASTER-RELATED PERSONAL CASUALTY LOSSES.—For purposes of this paragraph, the term ‘qualified disaster-related personal casualty losses’ means losses described in section 165(c)(3) of the Internal Revenue Code of 1986 which arise in a disaster area described in subsection (a) on or after January 1, 2016, and which are attributable to the events giving rise to the Presidential declaration described in subsection (a) which was applicable to such area.”
EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES
Section 502(a) of Pub. L. 115–63 provided:
“(a) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS—
“ (1) IN GENERAL .--Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified hurricane distribution.
“ (2) AGGREGATE DOLLAR LIMITATION.--
“(A) IN GENERAL. --For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified hurricane distributions for any taxable year shall not exceed the excess (if any) of--
“(i) $100,000, over
“(ii) the aggregate amounts treated as qualified hurricane distributions received by such individual for all prior taxable years.
“(B) TREATMENT OF PLAN DISTRIBUTIONS.--If a distribution to an individual would (without regard to subparagraph (A)) be a qualified hurricane distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified hurricane distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.
“(C) CONTROLLED GROUP.--For purposes of subparagraph (B), the term “controlled group” means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.
“(3) AMOUNT DISTRIBUTED MAY BE REPAID.--
“(A) IN GENERAL.--Any individual who receives a qualified hurricane distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be.
“ (B) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.--For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified hurricane distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified hurricane distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (C) Treatment of repayments for distributions from iras.--For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified hurricane distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified hurricane distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(4) DEFINITIONS.--For purposes of this subsection--
“(A) QUALIFIED HURRICANE DISTRIBUTION.--Except as provided in paragraph (2), the term “qualified hurricane distribution” means--
“(i) any distribution from an eligible retirement plan made on or after August 23, 2017, and before January 1, 2019, to an individual whose principal place of abode on August 23, 2017, is located in the Hurricane Harvey disaster area and who has sustained an economic loss by reason of Hurricane Harvey,
“(ii) any distribution (which is not described in clause (i)) from an eligible retirement plan made on or after September 4, 2017, and before January 1, 2019, to an individual whose principal place of abode on September 4, 2017, is located in the Hurricane Irma disaster area and who has sustained an economic loss by reason of Hurricane Irma, and
“(iii) any distribution (which is not described in clause (i) or (ii)) from an eligible retirement plan made on or after September 16, 2017, and before January 1, 2019, to an individual whose principal place of abode on September 16, 2017, is located in the Hurricane Maria disaster area and who has sustained an economic loss by reason of Hurricane Maria.
“(B) ELIGIBLE RETIREMENT PLAN.--The term “eligible retirement plan” shall have the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986.
“(5) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.--
“(A) IN GENERAL.--In the case of any qualified hurricane distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3- taxable-year period beginning with such taxable year.
“(B) SPECIAL RULE.--For purposes of subparagraph (A), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply. (6) Special rules.--
“(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES.--For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified hurricane distributions shall not be treated as eligible rollover distributions.
“(B) QUALIFIED HURRICANE DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION REQUIREMENTS.--For purposes the Internal Revenue Code of 1986, a qualified hurricane distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.
“(b) RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES.--
“(1) RECONTRIBUTIONS.--
“(A) IN GENERAL.--Any individual who received a qualified distribution may, during the period beginning on August 23, 2017, and ending on February 28, 2018, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), of such Code, as the case may be.
“(B) TREATMENT OF REPAYMENTS.--Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection.
“(2) QUALIFIED DISTRIBUTION.--For purposes of this subsection, the term “qualified distribution” means any distribution--
“(A) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F), of the Internal Revenue Code of 1986,
“(B) received after February 28, 2017, and before September 21, 2017, and
“(C) which was to be used to purchase or construct a principal residence in the Hurricane Harvey disaster area, the Hurricane Irma disaster area, or the Hurricane Maria disaster area, but which was not so purchased or constructed on account of Hurricane Harvey, Hurricane Irma, or Hurricane Maria.”
“(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES.—For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified hurricane distributions shall not be treated as eligible rollover distributions.”
ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE CARRIER BANKRUPTCY
Section 1106 of Pub. L. 112-95, as amended by Pub. L. 113-243, Sec. 1, provided that:
“(a) GENERAL RULES.—
“(1) ROLLOVER OF AIRLINE PAYMENT AMOUNT.—If a qualified airline employee receives any airline payment amount and transfers any portion of such amount to a traditional IRA within 180 days of receipt of such amount (or, if later, within 180 days of the date of the enactment of this Act), then such amount (to the extent so transferred) shall be treated as a rollover contribution described in section 402(c) of the Internal Revenue Code of 1986. A qualified airline employee making such a transfer may exclude from gross income the amount transferred, in the taxable year in which the airline payment amount was paid to the qualified airline employee by the commercial passenger airline carrier.
“(2) TRANSFER OF AMOUNTS ATTRIBUTABLE TO AIRLINE PAYMENT AMOUNT FOLLOWING ROLLOVER TO ROTH IRA.—A qualified airline employee who has contributed an airline payment amount to a Roth IRA that is treated as a qualified rollover contribution pursuant to section 125 of the Worker, Retiree, and Employer Recovery Act of 2008, may transfer to a traditional IRA, in a trustee-to-trustee transfer, all or any part of the contribution (together with any net income allocable to such contribution), and the transfer to the traditional IRA will be deemed to have been made at the time of the rollover to the Roth IRA, if such transfer is made within 180 days of the date of the enactment of this Act. A qualified airline employee making such a transfer may exclude from gross income the airline payment amount previously rolled over to the Roth IRA, to the extent an amount attributable to the previous rollover was transferred to a traditional IRA, in the taxable year in which the airline payment amount was paid to the qualified airline employee by the commercial passenger airline carrier. No amount so transferred to a traditional IRA may be treated as a qualified rollover contribution with respect to a Roth IRA within the 5-taxable year period beginning with the taxable year in which such transfer was made.
“(3) EXTENSION OF TIME TO FILE CLAIM FOR REFUND.—A qualified airline employee who excludes an amount from gross income in a prior taxable year under paragraph (1) or (2) may reflect such exclusion in a claim for refund filed within the period of limitation under section 6511(a) of such Code (or, if later, April 15, 2015).
“(4) OVERALL LIMITATION ON AMOUNTS TRANSFERRED TO TRADITIONAL IRAS.—
“(A) IN GENERAL.—The aggregate amount of airline payment amounts which may be transferred to 1 or more traditional IRAs under paragraphs (1) and (2) with respect to any qualified employee for any taxable year shall not exceed the excess (if any) of—
“(i) 90 percent of the aggregate airline payment amounts received by the qualified airline employee during the taxable year and all preceding taxable years, over
“(ii) the aggregate amount of such transfers to which paragraphs (1) and (2) applied for all preceding taxable years.
“(B) SPECIAL RULES.—For purposes of applying the limitation under subparagraph (A)—
“(i) any airline payment amount received by the surviving spouse of any qualified employee, and any amount transferred to a traditional IRA by such spouse under subsection (d), shall be treated as an amount received or transferred by the qualified employee, and
“(ii) any amount transferred to a traditional IRA which is attributable to net income described in paragraph (2) shall not be taken into account.
“(5) COVERED EXECUTIVES NOT ELIGIBLE TO MAKE TRANSFERS.—Paragraphs (1) and (2) shall not apply to any transfer by a qualified airline employee (or any transfer authorized under subsection (d) by a surviving spouse of the qualified airline employee) if at any time during the taxable year of the transfer or any preceding taxable year the qualified airline employee held a position described in subparagraph (A) or (B) of section 162(m)(3) with the commercial passenger airline carrier from whom the airline payment amount was received.
“(b) TREATMENT OF AIRLINE PAYMENT AMOUNTS AND TRANSFERS FOR EMPLOYMENT TAXES.—For purposes of chapter21 of the Internal Revenue Code of 1986 and section 209 of the Social Security Act, an airline payment amount shall not fail to be treated as a payment of wages by the commercial passenger airline carrier to the qualified airline employee in the taxable year of payment because such amount is excluded from the qualified airline employee's gross income under subsection (a).
“(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section—
“(1) AIRLINE PAYMENT AMOUNT.—
“(A) IN GENERAL.—The term “airline payment amount” means any payment of any money or other property which is payable by a commercial passenger airline carrier to a qualified airline employee—
“(i) under the approval of an order of a Federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, or filed on November 29, 2011, and
“(ii) in respect of the qualified airline employee's interest in a bankruptcy claim against the carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount. The amount of such payment shall be determined without regard to any requirement to deduct and withhold tax from such payment under sections 3102(a) of the Internal Revenue Code of 1986 and 3402(a) of such Code.
“(B) EXCEPTION.—An airline payment amount shall not include any amount payable on the basis of the carrier's future earnings or profits.
“(2) QUALIFIED AIRLINE EMPLOYEE.—The term “qualified airline employee” means an employee or former employee of a commercial passenger airline carrier who was a participant in a defined benefit plan maintained by the carrier which—
“(A) is a plan described in section 401(a) of the Internal Revenue Code of 1986 which includes a trust exempt from tax under section 501(a) of such Code, and
“(B) was terminated, became subject to the restrictions contained in paragraphs (2) and (3) of section 402(b) of the Pension Protection Act of 2006, or was frozen effective November 1, 2012.
“(3) TRADITIONAL IRA.—The term “traditional IRA” means an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) which is not a Roth IRA.
“(4) ROTH IRA.—The term “Roth IRA” has the meaning given such term by section 408A(b) of such Code.
“(d) SURVIVING SPOUSE.—If a qualified airline employee died after receiving an airline payment amount, or if an airline payment amount was paid to the surviving spouse of a qualified airline employee in respect of the qualified airline employee, the surviving spouse of the qualified airline employee may take all actions permitted under section 125 of the Worker, Retiree and Employer Recovery Act of 2008, or under this section, to the same extent that the qualified airline employee could have done had the qualified airline employee survived.
“(e) EFFECTIVE DATE.—This section shall apply to transfers made after the date of the enactment of this Act with respect to airline payment amounts paid before, on, or after such date.”
MODIFICATION OF REGULATIONS
Section 1102(a)(1)(B) of Pub. L. 109-280 provided that:
“The Secretary of the Treasury shall modify the regulations under sections 402(f), 411(a)(11), and 417 of the Internal Revenue Code of 1986 by substituting ‘180 days’ for ‘90 days’ each place it appears in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), and 1.417(e)-1(b).”
TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS FOR RELIEF RELATING TO HURRICANE KATRINA
Section 101 of Pub. L. 109-73, before repeal by Pub. L. 109-135, Sec. 201(b)(4) (effective Dec. 21, 2005) provided that:
“(a) IN GENERAL.--Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified Hurricane Katrina distribution.
“(b) AGGREGATE DOLLAR LIMITATION.--
“(1) IN GENERAL.--For purposes of this section, the aggregate amount of distributions received by an individual which may be treated as qualified Hurricane Katrina distributions for any taxable year shall not exceed the excess (if any) of--
“(A) $100,000, over
“(B) the aggregate amounts treated as qualified Hurricane Katrina distributions received by such individual for all prior taxable years.
“(2) TREATMENT OF PLAN DISTRIBUTIONS.--If a distribution to an individual would (without regard to paragraph (1)) be a qualified Hurricane Katrina distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified Hurricane Katrina distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.
“(3) CONTROLLED GROUP.--For purposes of paragraph (2), the term “controlled group” means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of such Code.
“(c) AMOUNT DISTRIBUTED MAY BE REPAID.--
“(1) IN GENERAL.--Any individual who receives a qualified Hurricane Katrina distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as the case may be.
“(2) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.--For purposes of such Code, if a contribution is made pursuant to paragraph (1) with respect to a qualified Hurricane Katrina distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified Hurricane Katrina distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(3) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS.--For purposes of such Code, if a contribution is made pursuant to paragraph (1) with respect to a qualified Hurricane Katrina distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified Hurricane Katrina distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(d) DEFINITIONS.--For purposes of this section--
“(1) QUALIFIED HURRICANE KATRINA DISTRIBUTION.--Except as provided in subsection (b), the term “qualified Hurricane Katrina distribution” means any distribution from an eligible retirement plan made on or after August 25, 2005, and before January 1, 2007, to an individual whose principal place of abode on August 28, 2005, is located in the Hurricane Katrina disaster area and who has sustained an economic loss by reason of Hurricane Katrina.
“(2) ELIGIBLE RETIREMENT PLAN.--The term “eligible retirement plan” shall have the meaning given such term by section 402(c)(8)(B) of such Code.
“(e) INCOME INCLUSION SPREAD OVER 3 YEAR PERIOD FOR QUALIFIED HURRICANE KATRINA DISTRIBUTIONS.--
“(1) IN GENERAL.--In the case of any qualified Hurricane Katrina distribution, unless the taxpayer elects not to have this subsection apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable year period beginning with such taxable year.
“(2) SPECIAL RULE.--For purposes of paragraph (1), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of such Code shall apply.
“(f) SPECIAL RULES.--
“(1) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES.--For purposes of sections 401(a)(31), 402(f), and 3405 of such Code, qualified Hurricane Katrina distributions shall not be treated as eligible rollover distributions.
“(2) QUALIFIED HURRICANE KATRINA DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION REQUIREMENTS.--For purposes of such Code, a qualified Hurricane Katrina distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.”
RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED DUE TO HURRICANE KATRINA
Section 102 of Pub. L. 109-73, before repeal by Pub. L. 109-135, Sec. 201(b)(4) (effective Dec. 21, 2005) provided that:
“(a) RECONTRIBUTIONS.--
“(1) IN GENERAL.--Any individual who received a qualified distribution may, during the period beginning on August 25, 2005, and ending on February 28, 2006, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of such Code, as the case may be.
“(2) TREATMENT OF REPAYMENTS.--Rules similar to the rules of paragraphs (2) and (3) of section 101(c) of this Act shall apply for purposes of this section.
“(b) QUALIFIED DISTRIBUTION DEFINED.--For purposes of this section, the term “qualified distribution” means any distribution--
“(1) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F) of such Code,
“(2) received after February 28, 2005, and before August 29, 2005, and
“(3) which was to be used to purchase or construct a principal residence in the Hurricane Katrina disaster area, but which was not so purchased or constructed on account of Hurricane Katrina.”
CLARIFICATION OF DISQUALIFICATION RULES RELATING TO ACCEPTANCE OF ROLLOVER CONTRIBUTIONS
Section 1509 of Pub. L. 105-34 provided that: “The Secretary of the Treasury or his delegate shall clarify that, under the Internal Revenue Service regulations protecting pension plans from disqualification by reason of the receipt of invalid rollover contributions under section 402(c) of the Internal Revenue Code of 1986, in order for the administrator of the plan receiving any such contribution to reasonably conclude that the contribution is a valid rollover contribution it is not necessary for the distributing plan to have a determination letter with respect to its status as a qualified plan under section 401 of such Code.”
APPLICABILITY OF SUBSECTION (d)
Section 1401(c)(2) of Pub. L. 104-188 provided that: ‘The amendments made by this section shall not apply to any distribution for which the taxpayer is eligible to elect the benefits of section 1122(h)(3) or (h)(5) of the Tax Reform Act of 1986. Notwithstanding the preceding sentence, individuals who elect such benefits after December 31, 1999, shall not be eligible for 5-year averaging under section 402(d) of the Internal Revenue Code of 1986 (as in effect immediately before such amendments).
SPECIAL NOTE REGARDING DATE FOR ADOPTION OF PLAN AMENDMENTS
Section 523 of Pub. L. 102-318 provided that:
“If any amendment made by [sections 521 and 522] requires an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after January 1, 1994, if --
(1) during the period after such amendment takes effect and before such first plan year, the plan is operated in accordance with the requirements of such amendment, and
(2) such plan amendment applies retroactively to such period.”
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508, set out as a note under section 29 of this title.
INCORPORATION BY REFERENCE OF SUBSECTION (g) LIMITATIONS
Section 1011(c)(10) of Pub. L. 100-647 provided that: ‘Notwithstanding any other provision of law, a plan may incorporate by reference the dollar limitations under section 402(g) of the Internal Revenue Codeof 1986.'
APPLICABILITY OF SUBSECTION (a)(5)(F)(ii)
Section 1011A(a)(5) of Pub. L. 100-647 provided that: ‘Section 402(a)(5)(F)(ii) of the Internal Revenue Code of 1954 shall not apply to distributions after October 22, 1986, and before the 1st taxable year beginning after 1986 which are attributable to benefits which accrued before January 1, 1985.'
APPLICABILITY OF SUBSECTION (a)(5)(D)(i)(II)
Section 1011A(b)(4)(E) of Pub. L. 100-647 provided that: ‘Section 402(a)(5)(D)(i)(II) of the 1986 Code (as in effect after the amendment made by subparagraph (A)) shall not apply to distributions after December 31, 1986, and before March 31, 1988.’
ELECTION TO TREAT CERTAIN LUMP SUM DISTRIBUTIONS RECEIVED DURING 1987 AS RECEIVED DURING 1986
Section 1124 of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, Sec. 1011A(d), Nov. 10, 1988, 102 Stat. 3476, provided that:
‘(a) In General. - If an employee dies, separates from service, or becomes disabled before 1987 and an individual, trust, or estate receives a lump-sum distribution with respect to such employee after December 31, 1986, and before March 16, 1987, on account of such death, separation from service, or disability, then, for purposes of the Internal Revenue Code of 1986, such individual, estate, or trust may treat such distribution as if it were received in 1986.
‘(b) Special Rule for Terminated Plan. - In the case of an individual, estate, or trust who receives with respect to an employee a distribution from a terminated plan which was maintained by a corporation organized under the laws of the State of Nevada, the principal place of business of which is Denver, Colorado, and which filed for relief from creditors under the United States Bankruptcy Code on August 28, 1986, the individual, estate, or trust may treat a lump sum distribution received from such plan before June 30, 1987, as if it were received in 1986.
‘(c) Lump Sum Distribution. - For purposes of this section, the term ‘lump sum distribution’ has the meaning given such term by section 402(e)(4)(A) of the Internal Revenue Code of 1986, without regard to subparagraph (B) or (H) of section 402(e)(4) of such Code.'
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99-514, as amended, set out as a note under section 401 of this title.
ISSUANCE OF FINAL REGULATIONS
Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final regulations to carry out amendments made by section 1112 of Pub. L. 99-514, see section 1141 of Pub. L. 99-514, set out as a note under section 401 of this title.
TREATMENT OF CERTAIN DISTRIBUTIONS FROM QUALIFIED TERMINATED PLAN
Section 551 of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(a) In General. - For purposes of the Internal Revenue Code (of) 1986 (formerly I.R.C. 1954), if -
‘(1) a distribution was made from a qualified terminated plan to an employee on December 16, 1976, and on January 6, 1977, such employee transferred all of the property received in such distribution to an individual retirement account (within the meaning of section 408(a) of such Code) established for the benefit of such employee, and
‘(2) the remaining balance to the credit of such employee in such qualified terminated plan was distributed to such employee on January 21, 1977, and all the property received by such employee in such distribution was transferred by such employee to such individual retirement account on January 21, 1977, then such distributions shall be treated as qualifying rollover distributions (within the meaning of section 402(a)(5) of such Code) and shall not be includible in the gross income of such employee for the taxable year in which paid.
‘(b) Qualified Terminated Plan. - For purposes of this section, the term ‘qualified terminated plan’ means a pension plan -
‘(1) with respect to which a notice of sufficiency was issued by the Pension Benefit Guaranty Corporation on December 2, 1976, and
‘(2) which was terminated by corporate action on February 20, 1976.
‘(c) Refund or Credit of Overpayment Barred by Statute of Limitations. - Notwithstanding section 6511(a) of the Internal Revenue Code of 1986 or any other period of limitation or lapse of time, a claim for credit or refund of overpayment of the tax imposed by such Code which arises by reason of this section may be filed by any person at any time within the 1-year period beginning on the date of enactment of this Act (July 18, 1984). Sections 6511(b) and 6514 of such Code shall not apply to any claim for credit or refund filed under this subsection within such 1-year period.'
TRANSITIONAL RULE IN CASE OF ROLLOVER CONTRIBUTIONS TO EMPLOYEE TRUSTS OR ANNUITIES
Section 157(h)(3)(B) of Pub. L. 95-600, as amended by Pub. L. 96-222, title I, Sec. 101(a)(14)(A), (D), Apr. 1, 1980, 94 Stat. 204, 205; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘In the case of any payment made during 1978 which is described in section 402(a)(5)(A) or 403(a)(4)(A) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) by reason of the amendments made by this subsection (amending sections 402 and 408 of this title), the applicable period specified in section 402(a)(5)(C) of such Code (or in the case of an individual retirement annuity, such section as made applicable by section 403(a)(4)(B) of such code) shall not expire before the close of December 31, 1980.'
TRANSITIONAL RULES RELATING TO PERIOD FOR ROLLOVER CONTRIBUTION
Section 1(d) of Pub. L. 94-267, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. -
‘(A) Period for rollover contribution. - In the case of a payment described in section 402(a)(5)(A) (other than a payment described in section 402(a)(5)(A) as in effect on the day before the date of the enactment of this Act) (Apr. 15, 1976) or section 403(a)(4)(A) (other than a payment described in section 403(a)(4)(A) as in effect on the day before the date of the enactment of this Act (Apr. 15, 1976) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (relating to distributions of the balance to the credit of the employee) which is contributed by an employee after the date of the enactment of this Act (Apr. 15, 1976) to a trust, plan, account, annuity, or bond described in section 402(a)(5)(B) or 403(a)(4)(B) of such Code, the applicable period specified in section 402(a)(5)(B) or 403(a)(4)(B) of such Code (relating to rollover distributions to another plan or retirement account) shall not expire before December 31, 1976.
‘(B) Time of contribution. -
(i) General rule. - If the initial portion of a payment the applicable period for which is determined under subparagraph (A) is contributed before December 31, 1976, by an individual to a trust, plan, account, annuity, or bond described in subparagraph (A) and the remaining portion of such payment is contributed by such individual to such a trust, plan, account, annuity, or bond not later than 30 days after the date a credit or refund is allowed by the Secretary of the Treasury or his delegate under section 6402 of the Internal Revenue Code of 1986 with respect to the contribution, then, for purposes of subparagraph (A) and sections 402(a)(5) and 403(a)(4) of such Code, at the election of the individual (made in accordance with regulations prescribed by the Secretary or his delegate), such remaining portion shall be considered to have been contributed on the date the initial portion of the payment was contributed. For purposes of this subparagraph, the initial portion of a payment is the amount by which such payment exceeds the amount of the tax imposed on such payment by chapter 1 of such Code (determined without regard to this subparagraph). (chapter 1 of this title)
‘(ii) Regulations. - For purposes of this subparagraph, the tax imposed on a payment by chapter 1 of the Internal Revenue Code of 1986, and the date a credit or refund is allowed by the Secretary of the Treasury or his delegate under section 6402 with respect to a contribution, shall be determined under regulations prescribed by the Secretary of the Treasury or his delegate.
‘(C) Period of limitations. - If an individual has made the election provided by subparagraph (B), then -
‘(i) the period provided by the Internal Revenue Code of 1986 for the assessment of any deficiency for the taxable year in which the payment described in subparagraph (A) was made and each subsequent taxable year for which tax is determined by reference to the treatment of such payment under such Code or the status under such Code of any trust, plan, account, annuity, or bond described in subparagraph (A) shall, to the extent attributable to such treatment, not expire before the expiration of 3 years from the date the Secretary of the Treasury or his delegate is notified by the individual (in such manner as the Secretary of the Treasury or his delegate may prescribe) that such individual has made (or failed to make) the contribution of the remaining portion of the payment within the period specified in subparagraph (B)(i), and
‘(ii) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of section 6212(c) of such Code or the provisions of any other law or rule of law which would otherwise prevent such assessment.
‘(2) Rollover contribution for certain property sold. - Sections 402(a)(5)(C) and 403(a)(4)(C) of the Internal Revenue Code of 1986 (relating to the requirement that rollover amount must consist of property received in a distribution) shall not apply with respect to that portion of the property received in a payment described in section 402(a)(5)(A) (other than a payment described in section 402(a)(5)(A) as in effect on the day before the date of the enactment of this Act (Apr. 15, 1976) or 403(a)(4)(A) (other than a payment described in section 403(a)(4)(A) as in effect on the day before the date of the enactment of this Act) (Apr. 15, 1976) of such Code which is sold or exchanged by the employee on or before the date of the enactment of this Act, (Apr. 15, 1976), if the employee transfers an amount of cash equal to the proceeds received from the sale or exchange of such property in excess of the amount considered contributed by the employee (within the meaning of section 402(a)(4)(D)(i) of such Code).
‘(3) Nonrecognition of gain or loss. - For purposes of the Internal Revenue Code of 1986 (this title) no gain or loss shall be recognized with respect to the sale or exchange of property described in paragraph (2) if the proceeds of such sale or exchange are transferred by an employee in accordance with this subsection and the applicable provisions of section 402(a)(5) or 403(a)(4) of such Code.’