Page:United States Statutes at Large Volume 100 Part 3.djvu/627

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2435

(7) Section 3121(a)(5) is amended by striking out subparagraph (C) and inserting in lieu thereof the following subparagraph: "(C) under a simplified employee pension (as defined in section 408(k)(l)), other than any contributions described in section 408(k)(6),". (8) Section 3306(b)(5) is amended by striking out subparagraph (C) and inserting in lieu thereof the following subparagraph: J "(C) under a simplified employee pension (as defined in section 408(k)(l)), other than any contributions described in section 408(k)(6),". (h) EFFECTIVE DATE.—The amendments made by this section shall apply to years beginning after December 31, 1986. SEC. 1109. DEDUCTIBLE CONTRIBUTIONS PERMITTED UNDER SECTION 501(c)(18)PLAN.

(a) IN GENERAL.—Section 501(c)(18) is amended by striking out "and" at the end of subparagraph (B), by striking out the period at the end of subparagraph (C) and inserting in lieu thereof ", and" and by adding at the end thereof the following new subparagraph: "(D) in the case of a plan under which an employee may designate certain contributions as deductible— ^^' ' "(i) such contributions do not exceed the amount with respect to which a deduction is allowable under ^ section 219(b)(3), "(ii) requirements similar to the requirements of section 401(k)(3)(A)(ii) are met with respect to such elective ,y contributions, and [' "(iii) such contributions are treated as elective deferrals for purposes of section 402(g) (other than paragraph (4) thereof). For purposes of subparagraph (D)(ii), rules similar to the rules of section 401(k)(8) shall apply. For purposes of section 4979, any excess contribution under clause (ii) shall be treated as an excess contribution under a cash or deferred arrangement." (b) LIMITATION ON DEDUCTION.—Section 219(b), as amended by

section 1101(b), is amended by adding at the end thereof the following new paragraph: "(3) PLANS UNDER SECTION SOKCXIS).—Notwithstanding paragraph (1), the amount allowable as a deduction under subsection (a) with respect to any contributions on behalf of an employee to a plan described in section 501(c)(18) shall not exceed the lesser of"(A) $7,000, or "(B) an amount equal to 25 percent of the compensation ifiiii (gg defined in section 415(c)(3)) includible in the individual's gross income for such taxable year." (c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 1986. PART II—NONDISCRIMINATION REQUIREMENTS SEC. n i l. APPLICATION OF NONDISCRIMINATION RULES TEGRATED PLANS.

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(a) IN GENERAL.—Section 401(1) (relating to nondiscriminatory coordination of defined contribution plans with OASDI) is amended to read as follows: "(1) PERMITTED DISPARITY IN PLAN CONTRIBUTIONS OR BENEFITS.—

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