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Internal Revenue Code, § 403. Taxation Of Employee Annuities

I.R.C. § 403(a) Taxability Of Beneficiary Under A Qualified Annuity Plan
I.R.C. § 403(a)(1) Distributee Taxable Under Section 72
If an annuity contract is purchased by an employer for an employee under a plan which meets the requirements of section 404(a)(2) (whether or not the employer deducts the amounts paid for the contract under such section), the amount actually distributed to any distributee under the contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities).
I.R.C. § 403(a)(2) Special Rule For Health And Long-Term Care Insurance
To the extent provided in section 402(l), paragraph (1) shall not apply to the amount distributed under the contract which is otherwise includible in gross income under this subsection.
I.R.C. § 403(a)(3) Self-Employed Individuals
For purposes of this subsection, the term “employee" includes an individual who is an employee within the meaning of section 401(c)(1), and the employer of such individual is the person treated as his employer under section 401(c)(4).
I.R.C. § 403(a)(4) Rollover Amounts
I.R.C. § 403(a)(4)(A) General Rule
If—
I.R.C. § 403(a)(4)(A)(i)
any portion of the balance to the credit of an employee in an employee annuity described in paragraph (1) is paid to him in an eligible rollover distribution (within the meaning of section 402(c)(4)),
I.R.C. § 403(a)(4)(A)(ii)
the employee transfers any portion of the property he receives in such distribution to an eligible retirement plan, and
I.R.C. § 403(a)(4)(A)(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.
I.R.C. § 403(a)(4)(B) Certain Rules Made Applicable
The rules of paragraphs (2) through (7) and (11) and (9) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A).
I.R.C. § 403(a)(5) Direct Trustee-To-Trustee Transfer
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. § 403(b) Taxability Of Beneficiary Under Annuity Purchased By Section 501(c)(3) Organization Or Public School
I.R.C. § 403(b)(1) General Rule
If—
I.R.C. § 403(b)(1)(A)
an annuity contract is purchased—
I.R.C. § 403(b)(1)(A)(i)
for an employee by an employer described in section 501(c)(3) which is exempt from tax under section 501(a),
I.R.C. § 403(b)(1)(A)(ii)
for an employee (other than an employee described in clause (i)), who performs services for an educational organization described in section 170(b)(1)(A)(ii), by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing, or
I.R.C. § 403(b)(1)(A)(iii)
for the minister described in section 414(e)(5)(A) by the minister or by an employer.
I.R.C. § 403(b)(1)(B)
such annuity contract is not subject to subsection (a),
I.R.C. § 403(b)(1)(C)
the employee's rights under the contract are nonforfeitable, except for failure to pay future premiums,
I.R.C. § 403(b)(1)(D)
except in the case of a contract purchased by a church, such contract is purchased under a plan which meets the nondiscrimination requirements of paragraph (12), and
I.R.C. § 403(b)(1)(E)
in the case of a contract purchased under a salary reduction agreement, the contract meets the requirements of section 401(a)(30),
then contributions and other additions by such employer for such annuity contract shall be excluded from the gross income of the employee for the taxable year to the extent that the aggregate of such contributions and additions (when expressed as an annual addition (within the meaning of section 415(c)(2))) does not exceed the applicable limit under section 415. The amount actually distributed to any distributee under such contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities). For purposes of applying the rules of this subsection to contributions and other additions by an employer for a taxable year, amounts transferred to a contract described in this paragraph by reason of a rollover contribution described in paragraph (8) of this subsection or section 408(d)(3)(A)(ii) shall not be considered contributed by such employer.
I.R.C. § 403(b)(2) Special Rule For Health And Long-Term Care Insurance
To the extent provided in section 402(l), paragraph (1) shall not apply to the amount distributed under the contract which is otherwise includible in gross income under this subsection.
I.R.C. § 403(b)(3) Includible Compensation
For purposes of this subsection, the term “includible compensation” means, in the case of any employee, the amount of compensation which is received from the employer described in paragraph (1)(A), and which is includible in gross income (computed without regard to section 911) for the most recent period (ending not later than the close of the taxable year) which under paragraph (4) may be counted as one year of service, and which precedes the taxable year by no more than five years. Such term does not include any amount contributed by the employer for any annuity contract to which this subsection applies. Such term includes—
I.R.C. § 403(b)(3)(A)
any elective deferral (as defined in section 402(g)(3)), and
I.R.C. § 403(b)(3)(B)
any amount which is contributed or deferred by the employer at the election of the employee and which is not includible in the gross income of the employee by reason of section 125, 132(f)(4), or 457.
I.R.C. § 403(b)(4) Years Of Service
In determining the number of years of service for purposes of this subsection, there shall be included—
I.R.C. § 403(b)(4)(A)
one year for each full year during which the individual was a full-time employee of the organization purchasing the annuity for him, and
I.R.C. § 403(b)(4)(B)
a fraction of a year (determined in accordance with regulations prescribed by the Secretary) for each full year during which such individual was a part-time employee of such organization and for each part of a year during which such individual was a full-time or part-time employee of such organization.
In no case shall the number of years of service be less than one.
I.R.C. § 403(b)(5) Application To More Than One Annuity Contract
If for any taxable year of the employee this subsection applies to 2 or more annuity contracts purchased by the employer, such contracts shall be treated as one contract.
I.R.C. § 403(b)(6) [ Struck By Pub. L. 107-147, Sec. 411(p)(2).]
I.R.C. § 403(b)(7) Custodial Accounts For Regulated Investment Company Stock
I.R.C. § 403(b)(7)(A) Amounts Paid Treated As Contributions
For purposes of this title, amounts paid by an employer described in paragraph (1)(A) to a custodial account which satisfies the requirements of section 401(f)(2) shall be treated as amounts contributed by him for an annuity contract for his employee if—
I.R.C. § 403(b)(7)(A)(i)
the amounts are to be invested in regulated investment company stock to be held in that custodial account, and
I.R.C. § 403(b)(7)(A)(ii)
under the custodial account no such amounts may be paid or made available to any distributee (unless such amount is a distribution to which section 72(t)(2)(G) applies) before the employee dies, attains age 59-1/2, has a severance from employment, becomes disabled (within the meaning of section 72(m)(7)), or in the case of contributions made pursuant to a salary reduction agreement (within the meaning of section 3121(a)(5)(D)), encounters financial hardship.
I.R.C. § 403(b)(7)(B) Account Treated As Plan
For purposes of this title, a custodial account which satisfies the requirements of section 401(f)(2) shall be treated as an organization described in section 401(a) solely for purposes of subchapter F and subtitle F with respect to amounts received by it (and income from investment thereof).
I.R.C. § 403(b)(7)(C) Regulated Investment Company
For purposes of this paragraph, the term “regulated investment company” means a domestic corporation which is a regulated investment company within the meaning of section 851(a).
I.R.C. § 403(b)(8) Rollover Amounts
I.R.C. § 403(b)(8)(A) General Rule
If—
I.R.C. § 403(b)(8)(A)(i)
any portion of the balance to the credit of an employee in an annuity contract described in paragraph (1) is paid to him in an eligible rollover distribution (within the meaning of section 402(c)(4)),
I.R.C. § 403(b)(8)(A)(ii)
the employee transfers any portion of the property he receives in such distribution to an eligible retirement plan described in section 402(c)(8)(B), and
I.R.C. § 403(b)(8)(A)(iii)
in the case of a distribution of property other than money, the property 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. § 403(b)(8)(B) Certain Rules Made Applicable
The rules of paragraphs (2) through (7), (9), and (11) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A), except that section 402(f) shall be applied to the payor in lieu of the plan administrator.
I.R.C. § 403(b)(9) Retirement Income Accounts Provided By Churches, Etc.
I.R.C. § 403(b)(9)(A) Amounts Paid Treated As Contributions
For purposes of this title—
I.R.C. § 403(b)(9)(A)(i)
a retirement income account shall be treated as an annuity contract described in this subsection, and
I.R.C. § 403(b)(9)(A)(ii)
amounts paid by an employer described in paragraph (1)(A) to a retirement income account shall be treated as amounts contributed by the employer for an annuity contract for the employee on whose behalf such account is maintained.
I.R.C. § 403(b)(9)(B) Retirement Income Account
For purposes of this paragraph, the term “retirement income account” means a defined contribution program established or maintained by a church, or a convention or association of churches, including an organization described in section 414(e)(3)(A), to provide benefits under section 403(b) for an employee described in paragraph (1) or his beneficiaries.
I.R.C. § 403(b)(10) Distribution Requirements
Under regulations prescribed by the Secretary, this subsection shall not apply to any annuity contract (or to any custodial account described in paragraph (7) or retirement income account described in paragraph (9)) unless requirements similar to the requirements of section 401(a)(9) and 401(a)(31) are met (and requirements similar to the incidental death benefit requirements of section 401(a) are met) with respect to such annuity contract (or custodial account or retirement income account). 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 the transfer.
I.R.C. § 403(b)(11) Requirement That Distributions Not Begin Before Age 591/2, Severance From Employment, Death, Or Disability
This subsection shall not apply to any annuity contract unless under such contract distributions attributable to contributions made pursuant to a salary reduction agreement (within the meaning of section 402(g)(3)(C)) may be paid only—
I.R.C. § 403(b)(11)(A)
when the employee attains age 591/2, has a severance from employment, dies, or becomes disabled (within the meaning of section 72(m)(7)),
I.R.C. § 403(b)(11)(B)
in the case of hardship, or
I.R.C. § 403(b)(11)(C)
for distributions to which section 72(t)(2)(G) applies.
Such contract may not provide for the distribution of any income attributable to such contributions in the case of hardship.
I.R.C. § 403(b)(12) Nondiscrimination Requirements
I.R.C. § 403(b)(12)(A) In General
For purposes of paragraph (1)(D), a plan meets the nondiscrimination requirements of this paragraph if—
I.R.C. § 403(b)(12)(A)(i)
with respect to contributions not made pursuant to a salary reduction agreement, such plan meets the requirements of paragraphs (4), (5), (17), and (26) of section 401(a), section 401(m), and section 410(b) in the same manner as if such plan were described in section 401(a), and
I.R.C. § 403(b)(12)(A)(ii)
all employees of the organization may elect to have the employer make contributions of more than $200 pursuant to a salary reduction agreement if any employee of the organization may elect to have the organization make contributions for such contracts pursuant to such agreement.
For purposes of clause (i), a contribution shall be treated as not made pursuant to a salary reduction agreement if under the agreement it is made pursuant to a 1-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. For purposes of clause (ii), there may be excluded any employee who is a participant in an eligible deferred compensation plan (within the meaning of section 457) or a qualified cash or deferred arrangement of the organization or another annuity contract described in this subsection. Any nonresident alien described in section 410(b)(3)(C) may also be excluded. Subject to the conditions applicable under section 410(b)(4), there may be excluded for purposes of this subparagraph employees who are students performing services described in section 3121(b)(10) and employees who normally work less than 20 hours per week.
I.R.C. § 403(b)(12)(B) Church
For purposes of paragraph (1)(D), the term “church” has the meaning given to such term by section 3121(w)(3)(A). Such term shall include any qualified church-controlled organization (as defined in section 3121(w)(3)(B)).
I.R.C. § 403(b)(12)(C) State And Local Governmental Plans
For purposes of paragraph (1)(D), the requirements of subparagraph (A)(i) (other than those relating to section 401(a)(17)) shall not apply to a governmental plan (within the meaning of section 414(d)) maintained by a State or local government or political subdivision thereof (or agency or instrumentality thereof).
I.R.C. § 403(b)(13) Trustee-To-Trustee Transfers To Purchase Permissive Service Credit
No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is—
I.R.C. § 403(b)(13)(A)
for the purchase of permissive service credit (as defined in section 415(n)(3)(A)) under such plan, or
I.R.C. § 403(b)(13)(B)
a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.
I.R.C. § 403(b)(14) Death Benefits Under USERRA-Qualified Active Military Service
This subsection shall not apply to an annuity contract unless such contract meets the requirements of section 401(a)(37).
I.R.C. § 403(c) Taxability Of Beneficiary Under Nonqualified Annuities Or Under Annuities Purchased By Exempt Organizations
Premiums paid by an employer for an annuity contract which is not subject to subsection (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 such contract shall be substituted for the fair market value of the property for purposes of applying such section. The preceding sentence shall not apply to that portion of the premiums paid which is excluded from gross income under subsection (b). In the case of any portion of any contract which is attributable to premiums to which this subsection applies, the amount actually paid or made available under such contract to any beneficiary which is attributable to such premiums shall be taxable to the beneficiary (in the year in which so paid or made available) under section 72 (relating to annuities).
(Aug. 16, 1954, ch. 736, 68A Stat. 137; Sept. 2, 1958, Pub. L. 85-866, title I, Sec. 23(a)-(c), 72 Stat. 1620-1622; Oct. 4, 1961, Pub. L. 87-370, Sec. 3(a), 75 Stat. 801; Oct. 10, 1962, Pub. L. 87-792, Sec. 4(d), 76 Stat. 825; Feb. 26, 1964, Pub. L. 88-272, title II, Sec. 232(e)(4)-(6), 78 Stat. 111; Dec. 30, 1969, Pub. L. 91-172, title III, Sec. 321(b)(2), title V, Sec. 515(a)(2), 83 Stat. 591, 644; Sept. 2, 1974, Pub. L. 93-406, title II, Sec. 1022(e), 2002(g)(6), 2004(c)(4), 2005(b)(2), 88 Stat. 940, 969, 986, 991; Apr. 15, 1976, Pub. L. 94-267, Sec. 1(b), 90 Stat. 366; Oct. 4, 1976, Pub. L. 94-455, title XIV, Sec. 1402(b)(1)(D), (2), title XV, Sec. 1504(a), title XIX, Sec. 1901(a)(58), (b)(8)(A), 1906(b)(13)(A), 90 Stat. 1731, 1732, 1738, 1774, 1794, 1834; Oct. 14, 1978, Pub. L. 95-458, Sec. 4(b), 92 Stat. 1259; Nov. 6, 1978, Pub. L. 95-600, title I, Sec. 154(a), 156(a), (b), 157(g)(2), 92 Stat. 2801, 2802, 2808; Apr. 1, 1980, Pub. L. 96-222, title I, Sec. 101(a)(12), (13)(C), 94 Stat. 204; Aug. 13, 1981, Pub. L. 97-34, title III, Sec. 311(b)(3)(B), 95 Stat. 280; Sept. 3, 1982, Pub. L. 97-248, title II, Sec. 251(a), (b), (c)(3), 96 Stat. 529-531; Jan. 12, 1983, Pub. L. 97-448, title I, Sec. 103(c)(8)(B), 96 Stat. 2377; Apr. 20, 1983, Pub. L. 98-21, title I, Sec. 122(c)(4), 97 Stat. 87; July 18, 1984, Pub. L. 98-369, div. A, title IV, Sec. 491(d)(12), title V, Sec. 521(c), 522(a)(2), (3), (d)(9)-(11), title X, Sec. 1001(b)(4), 98 Stat. 849, 867, 869-871, 1011; Oct. 22, 1986, Pub. L. 99-514, title XI, Sec. 1120(a), (b), 1122(b)(1)(B), (d), 1123(c), title XVIII, Sec. 1852(a)(3)(A), (B), (5)(B), (b)(10), 100 Stat. 2463, 2466, 2469, 2474, 2865, 2867; Nov. 10, 1988, Pub. L. 100-647, title I, Sec. 1011(c)(7)(B), (12), (m)(1), (2), title VI, Sec. 6052(a)(1), 102 Stat. 3458, 3459, 3471, 3696; Nov. 5, 1990, Pub. L. 101-508, title XI, Sec. 11701(k), 104 Stat. 1388-513; July 3, 1992, Pub. L. 102-318, title V, Sec. 521, 522; Aug. 20, 1996, Pub. L. 104-188, title I, Sec. 1450, 1704(t)(69), 110 Stat. 1755; Pub. L. 105-34, title XV, XVI, Sec. 1504, 1505(c), 1601(d)(4)(A), 1601(d)(6)(B), Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title VI, Sec. 6005(c)(2)(B), July 22, 1998, 112 Stat 685; Pub. L. 106-554, Sec. 314, Dec. 21, 2000, 114 Stat. 2763; Pub. L. 107-16, Sec. 632, 641, 642, 646, 647, June 7, 2001, 115 Stat. 38; Pub. L. 107-147, Sec. 411, Mar. 9, 2002, 116 Stat. 21; Pub. L. 108-311, title IV, Sec. 404(e), 408(a)(11), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 109-135, title IV, Sec. 412(w), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 109-280, title VIII, Sec. 827(b), 829(a), 845(b), Aug. 17, 2006, 120 Stat. 780; Pub. L. 110-245, Sec. 104(c)(2), June 17, 2008, 122 Stat. 1624.)
BACKGROUND NOTES
AMENDMENTS
2008 - Subsec. (b)(14). Pub. L. 110-245, Sec. 104(c)(2), added par. (14).
2006 - Subsec. (a)(2). Pub. L. 109-280, Sec. 845(b)(1), added par. (2).
Subsec. (a)(4)(B). Pub. L. 109-280, Sec. 829(a)(2), amended subpar. (B) by inserting “and (11)” after “(7)”.
Subsec. (b)(2). Pub. L. 109-280, Sec. 845(b)(2), added par. (2).
Subsec. (b)(7)(A)(ii). Pub. L. 109-280, Sec. 827(b)(2), amended clause (ii) by inserting “(unless such amount is a distribution to which section 72(t)(2)(G) applies)” after “distributee”.
Subsec. (b)(8)(B). Pub. L. 109-280, Sec. 829(a)(3), amended subpar. (B) by substituting “, (9), and (11)” for “and (9)”.
Subsec. (b)(11)(A)-(C). Pub. L.109-280, Sec. 827(b)(3), amended par. (11) by striking “or” at the end of subpar. (A), by substituting “, or” for the period at the end of subpar. (B), and by adding subpar. (C).
2005 - Subsec. (b)(9)(B). Pub. L. 109-135, Sec. 412(w), amended subpar. (B) by inserting “or” before “a convention”.
2004 - Subsec. (a)(4)(B). Pub. L. 108-311, Sec. 404(e), amended subpar. (B). Before amendment, it read as follows:
“(B) Certain rules made applicable
“Rules similar to the rules of paragraphs (2) through (7) of section 402(c) shall apply for purposes of subparagraph (A).”
Subsec. (b)(7)(A)(ii). Pub. L. 108-311, Sec. 408(a)(11), amended clause (ii) by substituting “section 3121(a)(5)(D)” for “section 3121(a)(1)(D)”.
2002 - Subsec. (b)(1). Pub. L. 107-147, Sec. 411(p)(1), amended the matter following subpar. (E) of par. (1). Before amendment it read as follows:
“then amounts contributed by such employer for such annuity contract on or after such rights become nonforfeitable shall be excluded from the gross income of the employee for the taxable year to the extent that the aggregate of such amounts does not exceed the applicable limit under section 415. The amount actually distributed to any distributee under such contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities). For purposes of applying the rules of this subsection to amounts contributed by an employer for a taxable year, amounts transferred to a contract described in this paragraph by reason of a rollover contribution described in paragraph (8) of this subsection or section 408(d)(3)(A)(ii) shall not be considered contributed by such employer.”
Subsec. (b)(3). Pub. L. 107-147, Sec. 411(p)(3), amended par. (3) by inserting “, and which precedes the taxable year by no more than five years" at the end of the first sentence; and by striking “or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated” at the end of the second sentence.
Subsec. (b)(6). Pub. L. 107-147, Sec. 411(p)(2), struck par. (6). Prior to being struck it read as follows:
“(6) Forfeitable rights which become nonforfeitable
“For purposes of this subsection and section 72(f) (relating to special rules for computing employees' contributions to annuity contracts), if rights of the employee under an annuity contract described in subparagraphs (A) and (B) of paragraph (1) change from forfeitable to nonforfeitable rights, then the amount (determined without regard to this subsection) includible in gross income by reason of such change shall be treated as an amount contributed by the employer for such annuity contract as of the time such rights become nonforfeitable.”
2001 - Subsec. (b)(1). Pub. L. 107-16, Sec. 632(a)(2)(A), amended par. (1) by substituting “the applicable limit under section 415” for “the exclusion allowance for such taxable year”.
Subsec. (b)(1). Pub. L. 107-16, Sec. 642(b)(1), amended par. (1) by substituting “section 408(d)(3)(A)(ii)” for “section 408(d)(3)(A)(iii)”.
Subsec. (b)(2). Pub. L. 107-16, Sec. 632(a)(2)(B), struck par. (2). Before being struck it read as follows:
“(2) Exclusion allowance
“(A) In general
“For purposes of this subsection, the exclusion allowance for any employee for the taxable year is an amount equal to the excess, if any, of--
“(i) the amount determined by multiplying 20 percent of his includible compensation by the number of years of service, over
“(ii) the aggregate of the amounts contributed by the employer for annuity contracts and excludible from the gross income of the employee for any prior taxable year.
“(B) Election to have allowance determined under section 415 rules
“In the case of an employee who makes an election under section 415(c)(4)(D) to have the provisions of section 415(c)(4)(C) (relating to special rule for section 403(b) contracts purchased by educational institutions, hospitals, home health service agencies, and certain churches, etc.) apply, the exclusion allowance for any such employee for the taxable year is the amount which could be contributed (under section 415 without regard to section 415(c)(8)) by his employer under a plan described in section 403(a) if the annuity contract for the benefit of such employee were treated as a defined contribution plan maintained by the employer.
“(C) Number of years of service for duly ordained, commissioned, or licensed ministers or lay employees
“For purposes of this subsection and section 415(c)(4)(A)--
“(i) all years of service by--
“(I) a duly ordained, commissioned, or licensed minister of a church, or
“(II) a lay person, as an employee of a church, a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), shall be considered as years of service for 1 employer, and
“(ii) all amounts contributed for annuity contracts by each such church (or convention or association of churches) or such organization during such years for such minister or lay person shall be considered to have been contributed by 1 employer.
“For purposes of the preceding sentence, the terms “church” and “convention or association of churches" have the same meaning as when used in section 414(e).
“(D) Alternative exclusion allowance
“(i) In general
“In the case of any individual described in subparagraph (C), the amount determined under subparagraph (A) shall not be less than the lesser of--
“(I) $3,000, or
“(II) the includible compensation of such individual.
“(ii) Subparagraph not to apply to individuals with adjusted gross income over $17,000
“This subparagraph shall not apply with respect to any taxable year to any individual whose adjusted gross income for such taxable year (determined separately and without regard to any community property laws) exceeds $17,000.
“(iii) Special rule for foreign missionaries
“In the case of an individual described in subparagraph (C)(i) performing services outside the United States, there shall be included as includible compensation for any year under clause (i)(II) any amount contributed during such year by a church (or convention or association of churches) for an annuity contract with respect to such individual.”
Subsec. (b)(3). Pub. L. 107-16, Sec. 632(a)(2)(C), amended par. (3) by inserting “or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated" before the period at the end of the second sentence.
Subsec. (b)(7)(A)(ii). Pub. L. 107-16, Sec. 646(a)(2)(A), amended clause (ii) by substituting “has a severance from employment" from “separates from service”.
Subsec. (b)(8)(A)(ii). Pub. L. 107-16, Sec. 641(b)(1), amended clause (ii) by substituting “such distribution to an eligible retirement plan described in section 402(c)(8)(B)” for “such distribution to an individual retirement plan or to an annuity contract described in paragraph (1), and”.
Subsec. (b)(8)(B). Pub. L. 107-16, Sec. 641(e)(7), amended subpar. (B). Before amendment it read as follows:
“(B) Certain rules made applicable.--
“Rules similar to the rules of paragraphs (2) through (7) of section 402(c) (including paragraph (4)(C) thereof) shall apply for purposes of subparagraph (A).”
Subsec. (b)(11). Pub. L. 107-16, Sec. 646(a)(2)(B), amended the heading of par. (11) by substituting “severance from employment" for “separation from service”.
Subsec. (b)(11)(A). Pub. L. 107-16, Sec. 646(a)(2)(A), amended subpar. (A) by substituting “has a severance from employment" for “separates from service”.
Subsec. (b)(13). Pub. L. 107-16, Sec. 647(a), added par. (13).
2000 - Subsec. (b)(3)(B). Pub. L. 106-554, Sec. 314(e)(1), amended subpar. (B) by substituting “section 125, 132(f)(4), or" for “section 125 or”.
1998 - Subsec. (b)(8)(B). Pub. L. 105-206, Sec. 6005(c)(2)(B), amended subpar. (B) by inserting “(including paragraph (4)(C) thereof)" after “section 402(c)”.
1997 - Subsec. (b)(1)(A). Pub. L. 105-34, Sec. 1601(d)(6)(B) amended subpar. (A) by striking “or” at the end of clause (i); by inserting “or” at the end of clause (ii); and by adding clause (iii).
Subsec. (b)(3). Pub. L. 105-34, Sec. 1504(a)(1) amended par. (3) by adding “Such term includes” and the material following at the end.
Subsec. (b)(12)(C). Pub. L. 105-34, Sec. 1505(c), added subpar. (C).
1996 - Subsec. (b)(1)(E). Pub. L. 104-188 amended subpar. (E). Before amendment, subpar. (E) read as follows:
“(E) in the case of a contract purchased under a plan which provides a salary reduction agreement, the plan meets the requirements of section 401(a)(30)”.
1992 - Subsec. (a)(4)(A)(i). Pub. L. 102-318, Sec. 521(b)(12)(A), amended clause (i) by inserting “in an eligible rollover distribution (within the meaning of section 402(c)(4))” before the comma at the end.
Subsec. (a)(4)(B). Pub. L. 102-318, Sec. 521(b)(12)(B), amended subpar. (B). Before amendment, it read as follows:
“Rules similar to the rules of subparagraphs (B) through (G) of section 402(a)(5) and of paragraphs (6) and (7) of section 402(a) shall apply for purposes of subparagraph (A).”
Subsec.(a)(5). Pub. L. 102-318, Sec. 522(c)(2), added par. (5).
Subsec. (b)(8)(A)(i). Pub. L. 102-318, Sec. 521(b)(13), amended clause (i) by inserting “in an eligible rollover distribution (within the meaning of section 402(c)(4))” before the comma at the end.
Subsec. (b)(8)(B)-(D). Pub. L. 102-318, Sec. 521(b)(13)(B), struck subpar. (B)-(D) and added a new subpar. (B). Before being struck, subpar. (B)-(D) read as follows:
“(B) Special rules for partial distributions
“(i) In general
“In the case of any distribution other than a total distribution, rules similar to the rules of clauses (i) and (ii) of section 402(a)(5)(D) shall apply.
“(ii) Total distribution
“For purposes of subparagraph (A), the term “total distribution” means one or more distributions from an annuity contract described in paragraph (1) which would constitute a lump-sum distribution within the meaning of section 402(e)(4)(A) (determined without regard to subparagraphs (B) and (H) of section 402(e)(4)) if such annuity contract were described in subsection (a), or 1 or more distributions of accumulated deductible employee contributions (within the meaning of section 72(o)(5)).
“(C) Certain rules made applicable
“Rules similar to the rules of subparagraphs (B), (C), and (F)(i) of section 402(a)(5) and of paragraphs (6) and (7) of section 402(a) shall apply for purposes of subparagraph (A).
“(D) Required distributions not eligible for rollover treatment
“Subparagraph (A) shall not apply to any distribution to the extent such distribution is required under paragraph (10).”
Subsec. (b)(10). Pub. L. 102-318, Sec. 522(a)(3), amended par. (10) by substituting “section 401(a)(9) and 401(a)(31)” for “section 401(a)(9)”.
Subsec. (b)(10). Pub. L. 102-318, Sec. 522(c)(3), amended par. (10) by adding a new sentence at the end.
1990 - Subsec. (b)(12)(A). Pub. L. 101-508 inserted ‘involving a one-time irrevocable election’ after ‘similar arrangement’ in second sentence.
1988 - Subsec. (b)(1)(D). Pub. L. 100-647, Sec. 1011(m)(1)(B), substituted ‘paragraph (12)’ for ‘paragraph (10)’.
Subsec. (b)(1)(E). Pub. L. 100-647, Sec. 1011(c)(7)(B), added subpar. (E).
Subsec. (b)(10). Pub. L. 100-647, Sec. 1011(m)(1)(A), redesignated par. (10), relating to nondiscrimination requirements, as (12).
Subsec. (b)(12). Pub. L. 100-647, Sec. 1011(m)(1)(A), redesignated par. (10), relating to nondiscrimination requirements, as (12).
Subsec. (b)(12)(A). Pub. L. 100-647, Sec. 1011(m)(2), inserted ‘(17),’ after ‘paragraphs (4), (5),’ and ‘, section 401(m),’ after ‘of section 401(a)’ in cl. (i).
Pub. L. 100-647, Sec. 1011(c)(12), inserted after cl. (ii) ‘For purposes of clause (i), a contribution shall be treated as not made pursuant to a salary reduction agreement if under the agreement it is made pursuant to a 1-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.’
Pub. L. 100-647, Sec. 6052(a)(1), amended last sentence generally. Prior to amendment, last sentence read as follows: ‘For purposes of this subparagraph, students who normally work less than 20 hours per week may (subject to the conditions applicable under section 410(b)(4)) be excluded.’
1986 - Subsec. (a)(1). Pub. L. 99-514, Sec. 1122(d)(1), substituted ‘Distributee taxable under section 72’ for ‘General rule’ in heading and amended par. (1) generally. Prior to amendment, par. (1) read as follows: ‘Except as provided in paragraph (2), if an annuity contract is purchased by an employer for an employee under a plan which meets the requirements of section 404(a)(2) (whether or not the employer deducts the amounts paid for the contract under such section), the employee shall include in his gross income the amounts received under such contract for the year received as provided in section 72 (relating to annuities).’
Subsec. (a)(2). Pub. L. 99-514, Sec. 1122(b)(1)(B), struck out par. (2) which read as follows:
‘(A) General rule
‘If -
‘(i) an annuity contract is purchased by an employer for an employee under a plan described in paragraph (1);
‘(ii) such plan requires that refunds of contributions with respect to annuity contracts purchased under such plan be used to reduce subsequent premiums on the contracts under the plan; and
‘(iii) a lump sum distribution (as defined in section 402(e)(4)(A)) is paid to the recipient, so much of the total taxable amount (as defined in section 402(e)(4)(D)) of such distribution as is equal to the product of such total taxable amount multiplied by the fraction described in section 402(a)(2) shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401(c)(1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e)(4)(B) of section 402, but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph.
‘(B) Cross reference
‘For imposition of separate tax on ordinary income portion of lump sum distribution, see section 402(e).’
Subsec. (a)(4)(B). Pub. L. 99-514, Sec. 1852(a)(5)(B)(i), substituted ‘through (G)’ for ‘through (F)’.
Subsec. (b)(1). Pub. L. 99-514, Sec. 1122(d)(2), amended second sentence generally. Prior to amendment, second sentence read as follows: ‘The employee shall include in his gross income the amounts received under such contract for the year received as provided in section 72 (relating to annuities)’.
Subsec. (b)(1)(D). Pub. L. 99-514, Sec. 1120(a), added subpar. (D).
Subsec. (b)(7)(A)(ii). Pub. L. 99-514, Sec. 1123(c)(2), inserted ‘in the case of contributions made pursuant to a salary reduction agreement (within the meaning of section 3121(a)(1)(D)),’ after ‘section 72(m)(7)), or’.
Subsec. (b)(7)(D). Pub. L. 99-514, Sec. 1852(a)(3)(B), struck out subpar. (D) ‘Distribution requirements’ which read as follows: ‘For purposes of determining when the interest of an employee in a custodial account must be distributed, such account shall be treated in the same manner as an annuity contract.’
Subsec. (b)(8)(C). Pub. L. 99-514, Sec. 1852(b)(10), inserted ‘and’ before ‘(F)(i)’.
Subsec. (b)(8)(D). Pub. L. 99-514, Sec. 1852(a)(5)(B)(ii), added subpar. (D).
Subsec. (b)(10). Pub. L. 99-514, Sec. 1120(b), added par. (10) relating to nondiscrimination requirements.
Pub. L. 99-514, Sec. 1852(a)(3)(A), added par. (10) relating to distribution requirements.
Subsec. (b)(11). Pub. L. 99-514, Sec. 1123(c)(1), added par. (11).
Subsec. (c). Pub. L. 99-514, Sec. 1122(d)(3), amended last sentence generally. Prior to amendment, last sentence read as follows: ‘The amount actually paid or made available to any beneficiary under such contract shall be taxable to him in the year in which so paid or made available under section 72 (relating to annuities).’
1984 - Subsec. (a)(2)(A). Pub. L. 98-369, Sec. 1001(b)(4), substituted ‘6 months’ for ‘1 year’.
Subsec. (a)(4)(A)(i). Pub. L. 98-369, Sec. 522(a)(2), substituted ‘any portion of the balance to the credit of an employee in an employee annuity described in paragraph (1) is paid to him,’ for ‘the balance to the credit of an employee in an employee annuity described in paragraph (1) is paid to him in a qualifying rollover distribution.’
Subsec. (a)(4)(B). Pub. L. 98-369, Sec. 522(d)(9), substituted ‘(B) through (F)’ for ‘(B) through (E)’.
Subsec. (b)(1). Pub. L. 98-369, Sec. 491(d)(12), struck out ‘or 409(b)(3)(C)’ after ‘408(d)(3)(A)(iii)’.
Subsec. (b)(7)(D). Pub. L. 98-369, Sec. 521(c), added subpar. (D).
Subsec. (b)(8)(A)(i). Pub. L. 98-369, Sec. 522(a)(3), substituted ‘any portion of the balance to the credit of an employee in an annuity contract described in paragraph (1) is paid to him’ for ‘the balance to the credit of an employee is paid to him in a qualifying distribution’.
Subsec. (b)(8)(B). Pub. L. 98-369, Sec. 522(d)(10), substituted provisions relating to special rules for partial distributions for provisions relating to definition of qualifying distributions.
Subsec. (b)(8)(C). Pub. L. 98-369, Sec. 522(d)(11), substituted ‘(F)(i)’ for ‘(D)(v), and (E)(i)’.
1983 - Subsec. (b)(3). Pub. L. 98-21 substituted ‘section 911’ for ‘sections 105(d) and 911’.
Subsec. (b)(8)(C). Pub. L. 97-448 substituted ‘subparagraphs (B), (C), (D)(v), and (E)(i) of section 402(a)(5)’ for ‘subparagraphs (B), (C), and (E)(i) of section 402(a)(5)’.
1982 - Subsec. (b)(2)(B). Pub. L. 97-248, Sec. 251(a)(1), (c)(3), substituted ‘home health service agencies, and certain churches, etc.’ for ‘and home health service agencies’, and ‘(under section 415 without regard to section 415(c)(8))’ for ‘(under section 415)’.
Subsec. (b)(2)(C), (D). Pub. L. 97-248, Sec. 251(a)(2), added subpars. (C) and (D).
Subsec. (b)(9). Pub. L. 97-248, Sec. 251(b), added par. (9).
1981 - Subsec. (b)(8)(B)(i). Pub. L. 97-34 inserted ‘, or 1 or more distributions of accumulated deductible employee contributions (within the meaning of section 72(o)(5))’ after ‘subsection (a)’.
1980 - Subsec. (b). Pub. L. 96-222 substituted in par. (1) ‘409(b)(3)(C)’ for ‘409(d)(3)(C)’, and in par. (7)(A) ‘which satisfies’ for ‘which satisfied’.
1978 - Subsec. (a)(4). Pub. L. 95-600, Sec. 157(g)(2), in subpar. (B) substituted ‘paragraphs (6) and (7)’ for ‘paragraph (6)’.
Pub. L. 95-458, 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). Pub. L. 95-458 struck out par. (5) which related to special rules concerning time of termination of a profit-sharing plan and the treatment of the sale of a corporate subsidiary or assets as payment or distribution on account of termination of a plan of which an annuity trust was a part.
Subsec. (b)(1). Pub. L. 95-600, Sec. 156(b), inserted provision relating to application of rules of this subsection to amounts contributed by an employer for a taxable year.
Subsec. (b)(7)(A). Pub. L. 95-600, Sec. 154(a), struck out ‘the amounts are paid to provide a retirement benefit for that employee and are to be invested in regulated investment company stock to be held in that custodial account’ after ‘contract for his employee if’, and added cls. (i) and (ii).
Subsec. (b)(8). Pub. L. 95-600, Sec. 156(a), added par. (8).
1976 - Subsec. (a)(2)(A). 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)(D), provided that ‘6 months’ would be changed to ‘9 months’ for taxable years beginning in 1977.
Subsec. (a)(4). Pub. L. 94-455, Sec. 1901(a)(58), reenacted provisions following subpar. (C) without substantive change.
Pub. L. 94-267, Sec. 1(b)(2), substituted ‘a payment’ for ‘the lump-sum distribution’.
Subsec. (a)(4)(A). Pub. L. 94-267, Sec. 1(b)(1), restructured provisions by adding cl. (i) and designating existing provision as cl. (ii).
Subsec. (a)(5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’ wherever appearing.
Pub. L. 94-267, Sec. 1(b)(3), added par. (5).
Subsec. (b)(1)(A)(ii). Pub. L. 94-455, Sec. 1901(b)(8)(A), substituted ‘educational organization described in section 170(b)(1)(A)(ii)’ for ‘educational institution (as defined in section 151(e)(4))’.
Subsec. (b)(4)(B). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’.
Subsec. (b)(7)(C). Pub. L. 94-455, Sec. 1504(a), struck out ‘, and which issues only redeemable stock’ after ‘regulated investment company within the meaning of section 851(a)’.
1974 - Subsec. (a)(2). Pub. L. 93-406, Sec. 2005(b)(2), substituted ‘a lump sum distribution (as defined in section 4002(e)(4)(A)) is paid to the recipient’ for ‘the total amounts payable by reason of an employee's death or other separation from the service, or by reason of the death of an employee after the employee's separation from the service, are paid to the payee within one taxable year of the payee' as cl. (iii) of subpar. (A), substituted ‘so much of the total taxable amount (as defined in section 402(e)(4)(D)) of such distribution as is equal to the product of such total taxable amount multiplied by the fraction described in section 402(a)(2) shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401(c)(1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e)(4)(B) of section 402, but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph’ for ‘then the amount of such payments, to the extent exceeding the amount contributed by the employee (determined by applying section 72(f)), which employee contributions shall be reduced by any amounts theretofore paid to him which were not includible in gross income, shall be considered a gain from the sale or exchange of a capital asset held for more than 6 months. This subparagraph shall not apply to amounts paid to any payee to the extent such amounts are attributable to contributions made on behalf of the employee while he was an employee within the meaning of section 401(c)(1)’ following cl. (iii) of subpar. (A), substituted provisions setting out a cross reference to section 402(e) for provisions defining ‘total amounts’ as subpar. (B), and struck out subpar. (C) setting out limitations on capital gains treatment.
Subsec. (a)(4). Pub. L. 93-406, Sec. 2002(g)(6), added par. (4).
Subsec. (b)(2). Pub. L. 93-406, Sec. 2004(c)(4), designated existing provisions as subpar. (A) and added subpar. (B).
Subsec. (b)(7). Pub. L. 93-406, Sec. 1022(e), added par. (7).
1969 - Subsec. (a)(2)(C). Pub. L. 91-172, Sec. 515(a)(2), added subpar. (C).
Subsec. (c). Pub. L. 91-172, Sec. 321(b)(2), consolidated provisions of subsec. (c) providing for taxability of beneficiary under a nonqualified annuity, the employees gross income to include amount contributed by employer for annuity contract in the year in which amount is contributed, the amount to be included as provided in section 72 of this title and of subsec. (d) providing for taxability of beneficiary under certain forfeitable contracts purchased by exempt organizations, including farmers' cooperatives, the gross income to include amount contributed by employer after Dec. 31, 1957, in the year of change from forfeitable to nonforfeitable rights, the new provisions including premiums paid by an employer in accordance with section 83, except that value of the contract shall be substituted for fair market value of the property for purposes of applying such section 83, such provision not to be applicable to that portion of premiums paid which is excluded from gross income under subsec. (b) of this section.
Subsec. (d). Pub. L. 91-172, Sec. 321(b)(2), struck out subsec. (d) providing for taxability of beneficiary under certain forfeitable contracts purchased by exempt organizations, including farmers' cooperatives, gross income of the employee to include (amount contributed by employer after Dec. 31, 1957), in year of change from forfeitable to nonforfeitable rights. See subsec. (c) of this section.
1964 - Subsecs. (a)(1), (b)(1), (c). Pub. L. 88-272, Sec. 232(e)(4)-(6), struck out ‘except that section 72(e)(3) shall not apply’ after ‘(relating to annuities)’.
1962 - Subsec. (a)(2)(A). Pub. L. 87-792, Sec. 4(d)(1), (2), substituted ‘described in paragraph (1)’ for ‘which meets the requirements of section 401(a)(3), (4), (5), and (6)’ in cl. (i), and inserted sentence at end thereof providing that this subparagraph shall not apply to amounts paid to any payee to the extent such amounts are attributable to contributions made on behalf of the employee while he was an employee within the meaning of section 401(c)(1).
Subsec. (a)(3). Pub. L. 87-792, Sec. 4(d)(3), added par. (3).
1961 - Subsec. (b). Pub. L. 87-370, Sec. 3(a)(3), inserted ‘or public school’ in heading.
Subsec. (b)(1)(A). Pub. L. 87-370, Sec. 3(a)(1), included annuity contracts purchased for an employee, other than one described in clause (i) of this subpar., who performs services for an educational institution, as defined in section 151(e)(4) of this title, by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of either.
Subsec. (b)(3). Pub. L. 87-370, Sec. (3)(a)(2), substituted ‘the employer described in paragraph (1)(A)’ for ‘the employer described in section 501(c)(3) and exempt from tax under section 501(a)’.
1958 - Subsec. (a)(1). Pub. L. 85-866, Sec. 23(b), substituted ‘which meets the requirements of section 404(a)(2) (whether or not the employer deducts the amounts paid for the contract under such section),’ for ‘with respect to which the employer's contribution is deductible under section 404(a)(2), or if an annuity contract is purchased for an employee by an employer described in section 501(c)(3) which is exempt from tax under section 501(a),'.
Subsecs. (b) to (d). Pub. L. 85-866, Sec. 23(a), added subsec. (b), redesignated former subsec. (b) as (c), and added subsec. (d).
EFFECTIVE DATE OF 2008 AMENDMENT
Amendment by Sec. 104(c)(1) of Pub. L. 110-245 effective with respect to deaths and disabilities occurring on or after January 1, 2007. Sec. 104(d)(2) of Pub. L. 110-245 provided that:
“(2) PROVISIONS RELATING TO PLAN AMENDMENTS-
“ (A) IN GENERAL- If this subparagraph applies to any plan or contract amendment, 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)(iii).
“(B) AMENDMENTS TO WHICH SUBPARAGRAPH (A) APPLIES-
“(i) IN GENERAL- Subparagraph (A) shall apply to any amendment to any plan or annuity contract which is made—
“(I) pursuant to the amendments made by subsection (a) or pursuant to any regulation issued by the Secretary of the Treasury under subsection (a), and
“(II) on or before the last day of the first plan year beginning on or after January 1, 2010. In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), this clause shall be applied by substituting ‘2012’ for ‘2010’ in subclause (II).
“(ii) CONDITIONS- This paragraph shall not apply to any amendment unless—
“(I) the plan or contract is operated as if such plan or contract amendment were in effect for the period described in clause (iii), and
“(II) such plan or contract amendment applies retroactively for such period.
“(iii) PERIOD DESCRIBED- The period described in this clause is the period—
“(I) beginning on 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).”
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendments by Sec. 827(b) of Pub. L. 109-280 applicable to distributions after September 11, 2001. Section 827(c)(2) of Pub. L. 109-280 provided that:
“(2) WAIVER OF LIMITATIONS- If refund or credit of any overpayment of tax resulting from the amendments made by this section is prevented at any time before the close of the 1-year period beginning on the date of the enactment of this Act by the operation of any law or rule of law (including res judicata), such refund or credit may nevertheless be made or allowed if claim therefor is filed before the close of such period.”
Amendments by Sec. 829(a) of Pub. L. 109-280 applicable to distributions after December 31, 2006.
Amendments by Sec. 845(b) of Pub. L. 109-280 applicable to distributions in taxable years beginning after December 31, 2006.
EFFECTIVE DATE OF 2005 AMENDMENT
Amendment by Sec. 412(w) of Pub. L. 109-135 applicable on the date of the enactment of this Act [Enacted: Dec. 21, 2005].
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Sec. 404(e) of Pub. L. 108-311 applicable as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 641] to which it relates [effective: distributions after 2001].
Amendment by Sec. 408(a)(11) of Pub. L. 108-311 applicable on the date of the enactment of this Act [Enacted: Oct. 4, 2004].
EFFECTIVE DATE OF 2002 AMENDMENTS
Amendments by Sec. 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.
EFFECTIVE DATE OF 2001 AMENDMENTS
Amendments by Sec. 632(a)(2) of Pub. L. 107-16 applicable to years beginning after December 31, 2001.
Amendment by Sec. 641 of Pub. L. 107-16 applicable to distributions after December 31, 2001.
Amendment by Sec. 642(b) of Pub. L. 107-16 applicable to distributions after December 31, 2001.
Amendments by Sec. 646 of Pub. L. 107-16 applicable to distributions after December 31, 2001.
Amendment by Sec. 647 of Pub. L. 107-16 applicable to trustee-to-trustee transfers after December 31, 2001.
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 2000 AMENDMENTS
Amendment by Sec. 314(e)(1) of Pub. L. 106-554 applicable as if included in the provisions of the Taxpayer Relief Act of 1997 to which it relates [taxable years beginning after 1997].
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendment by Sec. 6005(c)(2)(B) of Pub. L. 105-206 applicable to distributions after December 31, 1998.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment by Sec. 1504(a)(1) of Pub. L. 105-34 applicable to years beginning after December 31, 1997.
Amendment by Sec. 1505(c) of Pub. L. 105-34 applicable to taxable years beginning on or after the date of enactment of this Act [Aug. 5, 1997]. Sec. 1505(d)(2), as amended by Pub. L. 105-206, Sec. 6015(b), and Pub. L. 109-280, Sec. 861(a)(2), provided the following special rule:
“(2) Treatment for years beginning before date of enactment.--A governmental plan (within the meaning of section 414(d) of the Internal Revenue Code of 1986) shall be treated as satisfying the requirements of sections 401(a)(3), 401(a)(4), 401(a)(26), 401(k), 401(m), 403 (b)(1)(D) and (b)(12)(A)(i), and 410 of such Code for all taxable years beginning before the date of enactment of this Act [Aug. 5, 1997].”
Note that the amendment of Sec. 1505(d)(2) by Pub. L. 109-280, Sec. 861(a)(2) [striking “maintained by a State or local government or political subdivision thereof (or agency or instrumentality thereof)"] is effective for any year beginning at the date of the enactment of Pub. L. 109-280 [Enacted: Aug. 17, 2006].
Amendments by Sec. 1601(d)(6) of Pub. L. 105-34 effective as if included in the provisions of the Small Business Job Protection Act of 1996 to which they relate.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 effective for taxable years beginning after December 31, 1995, except a contract shall not be required to meet any change in any requirement by reason of such amendment before the 90th day after the date of the enactment of this Act [Aug. 20, 1996].
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 Code of 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 of Pub. L. 102-318 effective for distributions after December 31, 1992. Sec. 522(d)(2) of Pub. L. 102-318 provided the following transition rule:
“(2) Transition Rule for Certain Annuity Contracts.-If, as of July 1, 1992, a State law prohibits a direct trustee-to-trustee transfer from an annuity contract described in section 403(b) of the Internal Revenue Code of 1986 which was purchased for an employee by an employer which is a State or a political subdivision thereof (or an agency or instrumentality of any 1 or more of either), the amendments made by this section shall not apply to distributions before the earlier of-
“(A) 90 days after the first day after July 1, 1992, on which such transfer is allowed under State law, or
“(B) January 1, 1994.”
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 effective, except as otherwise provided, as if included in the provision of the Revenue Reconciliation Act of 1989, Pub. L. 101-239, title VII, to which such amendment relates, see section 11701(n) of Pub. L. 101-508, set out as a note under section 42 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1011(c)(7)(B) of Pub. L. 100-647 applicable to plan years beginning after Dec. 31, 1987, with exception in case of a plan described in section 1105(c)(2) of Pub. L. 99-514, see section 1011(c)(7)(E) of Pub. L. 100-647, set out as a note under section 401 of this title.
Amendment by section 1011(c)(12), (m)(1), (2) 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 6052(a)(2) of Pub. L. 100-647 provided that: ‘The amendment made by paragraph (1) (amending this section) shall take effect as if included in the amendment made by section 1120(b) of the Reform Act (Pub. L. 99-514).'
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1120(c) of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, Sec. 1011(m)(3), Nov. 10, 1988, 102 Stat. 3471, provided that:
‘(1) In general. - Except as provided in paragraph (2), the amendments made by this section (amending this section) shall apply to years beginning after December 31, 1988.
‘(2) 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 amendments made by this section shall not apply to plan years beginning before the earlier of -
‘(A) January 1, 1991, or
‘(B) the later of -
‘(i) January 1, 1989, or
‘(ii) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after February 28, 1986).’
Amendment by section 1122(b)(1)(B), (d) of Pub. L. 99-514 applicable, except as otherwise provided, to amounts distributed after Dec. 31, 1986, in taxable years ending after such date, see section 1122(h) of Pub. L. 99-514, set out as a note under section 402 of this title.
Amendment by section 1123(c) of Pub. L. 99-514 applicable to years beginning after Dec. 31, 1988, but only with respect to distributions from contracts described in subsec. (b) of this section which are attributable to assets other than assets held as of the close of the last year beginning before Jan. 1, 1989, with certain exceptions and transition rule, see section 1123(e) of Pub. L. 99-514, as amended, set out as a note under section 72 of this title.
Section 1852(a)(3)(C) of Pub. L. 99-514 provided that: ‘The amendments made by this paragraph (amending this section) shall apply to benefits accruing after December 31, 1986, in taxable years ending after such date.’
Amendment by section 1852(a)(5)(B), (b)(10) 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.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 491(d)(12) 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.
Amendment by section 521(c) of Pub. L. 98-369 applicable to years beginning after Dec. 31, 1984, see section 521(e) of Pub. L. 98-369, set out as a note under section 401 of this title.
Amendment by section 522 of Pub. L. 98-369 applicable to distributions made after July 18, 1984, in taxable years ending after that date, see section 522(e) of Pub. L. 98-369, set out as a note under section 402 of this title.
Amendment by section 1001(b)(4) 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. 98-21 applicable to taxable years beginning after Dec. 31, 1983, except that if an individual's annuity starting date was deferred under section 105(d)(6) of this title as in effect on the day before Apr. 20, 1983, such deferral shall end on the first day of such individual's first taxable year beginning after Dec. 31, 1983, see section 122(d) of Pub. L. 98-21, set out as a note under section 22 of this title.
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 1982 AMENDMENT
Section 251(e) of Pub. L. 97-248, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, and Pub. L. 114-113, Div. Q, Sec. 336(b)(1), provided that:
‘(1) In general. - Except as provided in this subsection, the amendments made by this section (amending this section and section 415 of this title, and enacting a provision set out as a note below) shall apply to taxable years beginning after December 31, 1981.
‘(2) Retirement income accounts. - The amendments made by subsection (b) (amending this section) shall apply to taxable years beginning after December 31, 1974.
‘(3) Section 415 amendments. - The amendments made by subsection (c) (amending section 415 of this title) shall apply to years beginning after December 31, 1981.
‘(4) Correction period. - The amendment made by subsection (d) (enacting provisions set out below) shall take effect on July 1, 1982.
‘(5) Special rule for existing defined benefit arrangements. - Any defined benefit arrangement which is established by a church or a convention or association of churches (including an organization described in section 414(e)(3)(B)(ii) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) and which is in effect on the date of the enactment of this Act (Sept. 3, 1982) shall not be treated as failing to meet the requirements of section 403(b) of such Code merely because it is a defined benefit arrangement, and shall be subject to the applicable limitations of section 415(b) of such Code as if it were a defined benefit plan under section 401(a) of such Code (and not to the limitations of section 415(c) of such Code).’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by 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.
EFFECTIVE DATE OF 1980 AMENDMENT
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
Section 154(b) of Pub. L. 95-600 provided that: ‘The amendment made by this section (amending this section) shall apply to taxable years beginning after December 31, 1978.’
Section 156(d) of Pub. L. 95-600, as amended by Pub. L. 96-222, title I, Sec. 101(a)(13)(A), Apr. 1, 1980, 94 Stat. 204, provided that: ‘The amendments made by this section (amending this section and sections 219, 220, 408, 409, 2039, and 4973) shall apply to distributions or transfers made after December 31, 1977, in taxable years beginning after such date.’
Amendment by section 157(g)(2) of Pub. L. 95-600 applicable to lump-sum distributions completed after Dec. 31, 1978, in taxable years ending after such date, see section 157(g)(4) of Pub. L. 95-600, set out as a note under section 402 of this title.
Amendment by Pub. L. 95-458 applicable with respect to taxable years beginning after Dec. 31, 1974, see section 4(d) of Pub. L. 95-458, set out as a note under section 402 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 1504(b) of Pub. L. 94-455 provided that: ‘The amendment made by this section (amending this section) shall apply to taxable years beginning after December 31, 1975.’
Amendment by section 1901(a)(58), (b)(8)(A) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as a note under section 2 of this title.
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 AMENDMENT
Section 1022(e) of Pub. L. 93-406 provided that the amendment made by that section is effective Jan. 1, 1974.
Amendment by section 2002(g)(6) of Pub. L. 93-406 applicable on and after Sept. 2, 1974, with respect to contributions to an employees' trust described in section 401(a) which is exempt from tax under section 501(a) or an annuity plan described in section 403(a), see section 2002(i)(3) of Pub. L. 93-406, set out as a note under section 402 of this title.
Amendment by section 2004(c)(4) of Pub. L. 93-406 applicable to years beginning after Dec. 31, 1975, see section 2004(d) of Pub. L. 93-406, set out as an Effective Date; Transition Provisions note under section 415 of this title.
Amendment by section 2005(b)(2) of Pub. L. 93-406 applicable only with respect to distributions or payments made after Dec. 31, 1973, in taxable years beginning after Dec. 31, 1973, see section 2005(d) of Pub. L. 93-406, set out as a note under section 402 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 321(b)(2) 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.
Amendment by section 515(a)(2) of Pub. L. 91-172 applicable to taxable years ending after Dec. 31, 1969, see section 515(d) of Pub. L. 91-172, set out as a note under section 402 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by 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 AMENDMENT
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 1961 AMENDMENT
Section 3(b) of Pub. L. 87-370 provided that: ‘The amendments made by subsection (a) (amending this section) shall apply with respect to taxable years beginning after December 31, 1957.’
EFFECTIVE DATES OF 1958 AMENDMENT
Section 23(g) of Pub. L. 85-866 provided that: ‘The amendments made by subsections (a), (b), (c), and (d) (amending this section and section 101 of this title) shall apply with respect to taxable years beginning after December 31, 1957. The amendments made by subsection (e) (amending section 2039 of this title) shall apply with respect to estates of decedents dying after December 31, 1957. The amendments made by subsection (f) (amending section 2517 of this title) shall apply with respect to calendar years after 1957.’
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.”
TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS
Section 502(a) of Pub. L. 115-63 provided:
“ (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.”
MODIFICATIONS OF RULES GOVERNING HARDSHIPS AND UNFORSEEN FINANCIAL EMERGENCIES
Section 826 of Pub. L. 109-280 provided that:
“Within 180 days after the date of the enactment of this Act, the Secretary of the Treasury shall modify the rules for determining whether a participant has had a hardship for purposes of section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide that if an event (including the occurrence of a medical expense) would constitute a hardship under the plan if it occurred with respect to the participant's spouse or dependent (as defined in section 152 of such Code), such event shall, to the extent permitted under a plan, constitute a hardship if it occurs with respect to a person who is a beneficiary under the plan with respect to the participant. The Secretary of the Treasury shall issue similar rules for purposes of determining whether a participant has had--
“(1) a hardship for purposes of section 403(b)(11)(B) of such Code; or
“(2) an unforeseen financial emergency for purposes of sections 409A(a)(2)(A)(vi), 409A(a)(2)(B)(ii), and 457(d)(1)(A)(iii) of such Code.”
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.”
CERTAIN ARRANGEMENTS MAINTAINED BY THE YMCA RETIREMENT FUND TREATED AS CHURCH PLANS
Section 1 of Pub. L. 108-476 provided that:
“(1) CERTAIN ARRANGEMENTS MAINTAINED BY THE YMCA RETIREMENT FUND TREATED AS CHURCH PLANS.-
“(a) RETIREMENT PLANS.-
“(1) IN GENERAL.-For purposes of sections 401(a) and 403(b) of the Internal Revenue Code of 1986, any retirement plan maintained by the YMCA Retirement Fund as of January 1, 2003, shall be treated as a church plan (within the meaning of section 414(e) of such Code) which is maintained by an organization described in section 414(e)(3)(A) of such Code.
“(2) TAX-DEFERRED RETIREMENT PLAN.-In the case of a retirement plan described in paragraph (1) which allows contributions to be made under a salary reduction agreement-
(A) such treatment shall not apply for purposes of section 415(c)(7) of such Code, and
(B) any account maintained for a participant or beneficiary of such plan shall be treated for purposes of such Code as a retirement income account described in section 403(b)(9) of such Code, except that such account shall not, for purposes of section 403(b)(12) of such Code, be treated as a contract purchased by a church for purposes of section 403(b)(1)(D) of such Code.
(3) MONEY PURCHASE PENSION PLAN.-In the case of a retirement plan described in paragraph (1) which is subject to the requirements of section 401(a) of such Code-
(A) such plan (but not any reserves held by the YMCA Retirement Fund)-
(i) shall be treated for purposes of such Code as a defined contribution plan which is a money purchase pension plan, and
(ii) shall be treated as having made an election under section 410(d) of such Code for plan years beginning after December 31, 2005, except that notwithstanding the election-
(I) nothing in the Employee Retirement Income Security Act of 1974 or such Code shall prohibit the YMCA Retirement Fund from commingling for investment purposes the assets of the electing plan with the assets of such Fund and with the assets of any employee benefit plan maintained by such Fund, and
(II) nothing in this section shall be construed as subjecting any assets described in subclause (I), other than the assets of the electing plan, to any provision of such Act.
(B) notwithstanding section 401(a)(11) or 417 of such Code or section 205 of such Act, such plan may offer a lump-sum distribution option to participants who have not attained age 55 without offering such participants an annuity option, and
(C) any account maintained for a participant or beneficiary of such plan shall, for purposes of section 401(a)(9) of such Code, be treated as a retirement income account described in section 403(b)(9) of such Code.
(4) SELF-FUNDED DEATH BENEFIT PLAN.-For purposes of section 7702(j) of such Code, a retirement plan described in paragraph (1) shall be treated as an arrangement described in section 7702(j)(2).
“(b) YMCA RETIREMENT FUND.-For purposes of this section the term “YMCA Retirement Fund” means the Young Men's Christian Association Retirement Fund, a corporation created by an Act of the State of New York which became law on April 30, 1921.
“(c) EFFECTIVE DATE.-This section shall apply to plan years beginning after December 31, 2003.”
CLARIFICATION OF SECTION 1450 OF PUB. L. 104-188
Section 1601(d)(4) of Pub. L. 105-34, as amended by Pub. L. 105-206, Sec. 6016(a)(2), provided that:
“(4) Clarification of section 1450.--
(A) Paragraphs (7)(A)(ii) and (11) of section 403(b) of the Internal Revenue Code of 1986 shall not apply with respect to a distribution from a contract described in section 1450(b)(1) of such Act to the extent that such distribution is not includible in income by reason of--
(i) in the case of distributions before January 1, 1998, section 403 (b)(8) or (b)(10) of such Code (determined after the application of section 1450(b)(2) of such Act), and
(ii) in the case of distributions on and after such date, such section 403(b)(10).
(B) This paragraph shall apply as if included in section 1450 of the Small Business Job Protection Act of 1996.”
REPEAL OF RULES IN SECTION 415(e)
Section 1504(b) of Pub. L. 105-34 provided that: “The Secretary of the Treasury shall modify the regulations regarding the exclusion allowance under section 403(b)(2) of the Internal Revenue Code of 1986 to reflect the amendment made by section 1452(a) of the Small Business Job Protection Act of 1996. Such modification shall take effect for years beginning after December 31, 1999.”
MULTIPLE SALARY REDUCTION AGREEMENTS PERMITTED
Section 1450(a)(1) of Pub. L. 104-188 provided that:
“(1) General rule.--For purposes of section 403(b) of the Internal Revenue Code of 1986, the frequency that an employee is permitted to enter into a salary reduction agreement, the salary to which such an agreement may apply, and the ability to revoke such an agreement shall be determined under the rules applicable to cash or deferred elections under section 401(k) of such Code.”
TREATMENT OF INDIAN TRIBAL GOVERNMENTS
Section 1450(b)(1) of Pub. L. 104-188 provided that:
“(1) In general.--In the case of any contract purchased in a plan year beginning before January 1, 1995, section 403(b) of the Internal Revenue Code of 1986 shall be applied as if any reference to an employer described in section 501(c)(3) of the Internal Revenue Code of 1986 which is exempt from tax under section 501 of such Code included a reference to an employer which is an Indian tribal government (as defined by section 7701(a)(40) of such Code), a subdivision of an Indian tribal government (determined in accordance with section 7871(d) of such Code), an agency or instrumentality of an Indian tribal government or subdivision thereof, or a corporation chartered under Federal, State, or tribal law which is owned in whole or in part by any of the foregoing.”
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.”
SAMPLING TO DETERMINE WHETHER PLAN MEETS SUBSECTION (b)(12) REQUIREMENTS
Section 6052(b) of Pub. L. 100-647 provided that: ‘In the case of plan years beginning in 1989, 1990, or 1991, determinations as to whether a plan meets the requirements of section 403(b)(12) of the 1986 Code may be made on the basis of a statistically valid random sample. The preceding sentence shall apply only if -
‘(1) the sampling is conducted by an independent person in a manner not inconsistent with regulations prescribed by the Secretary, and
‘(2) the statistical method and sample size result in a 95 percent probability that the results will have a margin of error not greater than 3 percent.’
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 1120 of Pub. L. 99-514, see section 1141 of Pub. L. 99-514, set out as a note under section 401 of this title.
CORRECTION PERIOD FOR CHURCH PLANS
Section 251(d) of Pub. L. 97-248, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘A church plan (within the meaning of section 414(e) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) shall not be treated as not meeting the requirements of section 401 or 403 of such Code if -
‘(1) by reason of any change in any law, regulation, ruling, or otherwise such plan is required to be amended to meet such requirements, and
‘(2) such plan is so amended at the next earliest church convention or such other time as the Secretary of the Treasury or his delegate may prescribe.’
TRANSITIONAL RULE FOR MAKING SECTION 403(b)(8) ROLLOVER IN THE CASE OF PAYMENTS DURING 1978
Section 101(a)(13)(B) of Pub. L. 96-222, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘In the case of any payment made during 1978 in a qualifying distribution described in section 403(b)(8) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954), the applicable period specified in section 402(a)(5)(C) of such Code shall not expire before the close of December 31, 1980.'
TRANSITIONAL RULE IN CASE OF ROLLOVER CONTRIBUTIONS TO EMPLOYEE TRUSTS OR ANNUITIES
Applicable period specified in section 402(a)(5)(C) of this title shall not expire before close of Dec. 31, 1980 in case of any payment described in subsec. (a)(4)(A) of this section or section 402(a)(5)(A) of this title, see section 157(h)(3)(B) of Pub. L. 95-600, set out as a note under section 402 of this title.