Page:United States Statutes at Large Volume 100 Part 3.djvu/615

 PUBLIC LAW 99-514—OCT. 22, 1986 .,^„

100 STAT. 2423

"(ii) meets the requirements of subparagraphs (C), (D), (E), and (F) and such other requirements as the Secretary may prescribe. "(C)

DETERMINATION

OF

AMOUNT

OF

BENEFIT.—An

arrangement meets the requirement of this subparagraph only if the cost-of-living adjustment of participants is based— "(i) on increases in the cost-of-living after the annuity starting date, and "(ii) on average cost-of-living increases determined by reference to 1 or more indexes prescribed by the Secretary, except that the arrangement may provide that the increase for any year will not be less than 3 percent of the retirement benefit (determined without regard to the arrangement).

^.

"(D)

ARRANGEMENT ELECTIVE; TIME FOR ELECTION.—An

arrangement meets the requirements of this subparagraph only if it is elective, it is available under the same terms to all participants, and it provides that such election may be made in— "(i) the year in which the participant— "(I) attains the earliest retirement age under the defined benefit plan (determined without regard to any requirement of separation from service), or "(II) separates from service, or "(ii) both such years. •%mi

"^E) NONDISCRIMINATION

REQUIREMENTS.—An

arrange-

ment shall not meet the requirements of this subparagraph if the Secretary finds that a pattern of discrimination exists with respect to participation.

^c, .^\.

"(F) SPECIAL RULES FOR KEY EMPLOYEES.—

"(i) IN GENERAL.—An arrangement shall not meet the requirements of this paragraph if any key employee is eligible to participate. "(ii) KEY EMPLOYEE.—For purposes of this subparagraph, the term 'key employee' has the meaning given such term by section 416(i)(l), except that in the case of a plan other than a top-heavy plan (within the meaning of section 416(g)), such term shall not include an individual who is a key employee solely by reason of section 416(i)(l)(A)(i)." (2) CERTAIN TRANSFERS TO DEFINED BENEFIT PLANS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF LUMP SUM DISTRIBUTION.—SEC-

tion 402(e)(4) (relating to special rules for lump sum distributions) is amended by adding at the end thereof the following new subparagraph: "(N)

3" -

TRANSFERS TO COST-OF-LIVING ARRANGEMENT NOT

TREATED AS DISTRIBUTION.—For purposes of this subsection, the balance to the credit of an employee under a defined contribution plan shall not include any amount transferred from such defined contribution plan to a qualified cost-ofliving arrangement (within the meaning of section 415(k)(2)) under a defined benefit plan."

(d) LIMITATION ON AMOUNT OF ANNUAL COMPENSATION WHICH MAY B E TAKEN INTO ACCOUNT.—

(1) IN GENERAL.—Subsection (a) of section 401 (relating to qualified pension, profit-sharing, and stock bonus plans) is

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