Page:United States Statutes at Large Volume 100 Part 3.djvu/648

 100 STAT. 2456

PUBLIC LAW 99-514—OCT. 22, 1986 / '" • ' '•''••

(ii) of paragraph (3)(A) for any plan year if, before the close of the following plan year— "(i) the amount of the excess contributions for such plan year (and any income allocable to such contribu" ^ tions) is distributed, or "(ii) to the extent provided in regulations, the employee elects to treat the amount of the excess contributions as an amount distributed to the employee and then contributed by the employee to the plan. Any distribution of excess contributions (and income) may be made without regard to any other provision of law. "(B) EXCESS CONTRIBUTIONS.—For purposes of subpara-

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graph (A), the term 'excess contributions' means, with respect to any plan year, the excess of— "(i) the aggregate amount of employer contributions -•• actually paid over to the trust on behalf of highly compensated employees for such plan year, over "(ii) the maximum amount of such contributions permitted under the limitations of clause (ii) of paragraph (3)(A) (determined by reducing contributions made on behalf of highly compensated employees in order of the actual deferral percentages beginning with the highest of such percentages). "(C) METHOD OF DISTRIBUTING EXCESS CONTRIBUTIONS.—

Any distribution of the excess contributions for any plan year shall be made to highly compensated employees on the basis of the respective portions of the excess contributions attributable to each of such employees. "(D) ADDITIONAL TAX UNDER SECTION 72(t) NOT TO APPLY.—

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No tax shall be imposed under section 72(t) on any amount required to be distributed under this paragraph. "(E) CROSS REFERENCE.—

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"For excise tax on certain excess contributions, see section 4979." (2) TECHNICAL AMENDMENT.—Clause (ii) of section 401(k)(3)(A)

is amended by striking out "paragraph (4)" and inserting in lieu thereof "paragraph (5)". (d) DEFINITIONS OF HIGHLY COMPENSATED EMPLOYEE AND COMPENSATION.— (1) HIGHLY COMPENSATED EMPLOYEE.—Paragraph (5) of section

401(k), as redesignated by this Act, is amended to read as ^, follows: "(5) HIGHLY COMPENSATED EMPLOYEE.—For purposes of this subsection, the term 'highly compensated employee' has the meaning given such term by section 414(q)." (2) COMPENSATION.—Section 401(k), as amended by this Act, is amended by adding at the end thereof the following new paragraph: "(9) COMPENSATION.—For purposes of this subsection, the (3) CONFORMING AMENDMENT.—Subparagraph (B) of section
 * "^ term 'compensation' has the meaning given such term by sec_>, tion414(s)/'

401(k)(3) is amended by striking out the last sentence thereof. (e) NONDISCRIMINATION STANDARDS.—Section 401(k)(3) is amended

by adding at the end thereof the following new subparagraph: "(C) For purposes of subparagraph (B), the employer contributions on behalf of any employee—

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