Page:United States Statutes at Large Volume 100 Part 3.djvu/625

 PUBLIC LAW 99-514—OCT. 22, 1986 "(2)

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100 STAT. 2433

LIMITATIONS ON EMPLOYER CONTRIBUTIONS.—Contribu-

tions made by an employer to a simplified employee pension with respect to an employee for any year shall be treated as distributed or made available to such employee and as contributions made by the employee to the extent such contributions exceed the lesser of— ., "(A) 15 percent of the compensation (within the meaning of section 414(s)) from such employer includible in the employee's gross income for the year (determined without regard to the employer contributions to the simplified employee pension), or "(B) the limitation in effect under section 415(c)(1)(A), reduced in the case of any highly compensated employee (within the meaning of section 414(q)) by the amount taken into account with respect to such employee under section 408(k)(3)(D). "(3) DISTRIBUTIONS.—Any amount paid or distributed out of an individual retirement plan pursuant to a simplified employee pension shall be included in gross income by the payee or distributee, as the case may be, in accordance with the provisions of section 408(d)."

(c) DEDUCTIBILITY OF CONTRIBUTIONS.—Subparagraphs (A) and (B)

of section 404(h)(1) (relating to special rules for simplified employee pensions) are amended to read as follows: "(A) Contributions made for a year are deductible— "(i) in the case of a simplified employee pension maintained on a calendar year basis, for the taxable year with or within which the calendar year ends, or t,.r "(ii) in the case of a simplified employee pension .,. which is maintained on the basis of the taxable year of the employer, for such taxable year. "(B) Contributions shall be treated for purposes of this subsection as if they were made for a taxable year if such ( contributions are made on account of such taxable year and are made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof)." (d) PARTICIPATION REQUIREMENTS.—Paragraph (2) of section 408(k) (relating to participation requirements) is amended to read as follows: "(2) PARTICIPATION REQUIREMENTS.—This paragraph is satisfied with respect to a simplified employee pension for a year only if for such year the employer contributes to the simplified ^ employee pension of each employee who— i^, jj^^ "(A) has attained age 21, "(B) has performed service for the employer during at least 3 of the immediately preceding 5 years, and "(C) received at least $300 in compensation (within the meaning of section 414(q)(7)) from the employer for the year. ,, For purposes of this paragraph, there shall be excluded from consideration employees described in subparagraph (A) or (C) of section 410(b)(3). For purposes of any arrangement described in subsection (k)(6), any employee who is eligible to have employer contributions made on the employee's behalf under such arrangement shall be treated as if such a contribution was made.'

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