Page:United States Statutes at Large Volume 100 Part 3.djvu/626

 100 STAT. 2434

PUBLIC LAW 99-514—OCT. 22, 1986

(e) CoST-OF-LiviNG ADJUSTMENTS.—Section 408(k) is amended by adding at the end thereof the following new paragraph: "(8) COST-OF-LIVING ADJUSTMENT.—The Secretary shall adjust the $300 amount in paragraph (2)(C) and the $200,000 amount in paragraph (3)(C) at the same time and in the same manner as under section 415(d)." (f) COMPUTATION PERIOD.—Section 408(k)(7) is amended by adding

at the end thereof the following new subparagraph: "(C) YEAR.—The term 'year' means— me OJi "(i) the calendar year, or "(ii) if the employer elects, subject to such terms and ,j\ I conditions as the Secretary may prescribe, to maintain the simplified employee pension on the basis of the employer's taxable year." (g) CONFORMING AMENDMENTS.—

(1) Section 408(k)(3) (relating to nondiscrimination requirements) is amended— m (A) by striking out all that follows "in favor o f in subparagraph (A) and inserting in lieu thereof "any highly •i-f compensated employee (within the meaning of section 414(q)).", (S: tir (B) in subparagraph (O— » •>*•!;• ' (i) by inserting "and except as provided in subparagraph (D)," after "subparagraph (A),", (ii) by inserting "(other than contributions under an arrangement described in paragraph (6))" after "employer contributions to simplified employee pensions", and ' ' (iii) by striking out the last sentence thereof, and (C) by striking out subparagraphs (D) and (E) and inserting in lieu thereof: ' •+ "(D) PERMITTED DISPARITY.—For purposes of subpara' graph (C), the rules of section 401(1)(2) shall apply to con' '• • tributions to simplified employee pensions (other than contributions under an arrangement described in para-t graph (6))." (2) Paragraph (2) of section 219(b) is amended to read as follows: "(2) SPECIAL RULE FOR EMPLOYER CONTRIBUTIONS UNDER SIMPLIFIED EMPLOYEE PENSIONS.—This section shall not apply with



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respect to an employer contribution to a simplified employee pension." (3) Section 219(c)(2)(B) is amended by striking out "(determined without regard to so much of the employer contributions to a simplified employee pension as is allowable by reason of paragraph (2) of subsection (b))". (4) Section 408(k)(3)(A) is amended by striking out "calendar". (5) Section 415(c)(2) is amended by striking out "allowable as a deduction under section 219(a), and without regard to deductible employee contributions within the meaning of section 72(o)(5)" and inserting in lieu thereof "which are excludable from gross income under section 408(k)(6)". (6) Section 408(k), as amended by subsection (e), is amended by adding at the end thereof the following new paragraph: "(9) CROSS REFERENCE.— "For excise tax on certain excess contributions, see section 4979."

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