Page:United States Statutes at Large Volume 100 Part 3.djvu/651

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2459

(i) SECRETARY TO PRESCRIBE AMENDMENT.—The Secretary of the Treasury or his delegate shall prescribe an amendment which allows a plan to make any distribution described in section 401(k)(8) of such Code. (ii) ADOPTION BY PLAN.—If a plan adopts the amendment prescribed under clause (i) and makes a distribution in accordance with such amendment, such distribution shall be treated as made in accordance with the provisions of the plan. SEC. 1117. NONDISCRIMINATION REQUIREMENTS FOR EMPLOYER M A T C H I N G CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS.

(a) GENERAL RULE.—Section 401 (relating to qualified pension, profit-sharing, and stock bonus plans) is amended by redesignating subsections (m) and (n) as subsections (n) and (o), respectively, and by inserting after subsection (1) the following new subsection: "(m) NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS.—

"(1) IN GENERAL.—A plan shall be treated as meeting the requirements of subsection (a)(4) with respect to the amount of any matching contribution or employee contribution for any plan year only if the contribution percentage requirement of paragraph (2) of this subsection is met for such plan year.

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"(2) REQUIREMENTS.— "(A) CONTRIBUTION PERCENTAGE REQUIREMENT.—A plan

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meets the contribution percentage requirement of this paragraph for any plan year only if the contribution percentage for eligible highly compensated employees does not exceed the greater of— "(i) 125 percent of such percentage for all other eligible employees, or "(ii) the lesser of 200 percent of such percentage for all other eligible employees, or such percentage for all other eligible employees plus 2 percentage points. "(B) MULTIPLE PLANS TREATED AS A SINGLE PLAN.—If two

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or more plans of an employer to which matching contributions, employee contributions, or elective deferrals are made are treated as one plan for purposes of section 410(b), such plans shall be treated as one plan for purposes of this subsection. If a highly compensated employee participates in two or more plans of an employer to which such contributions are made, all such contributions shall be aggregated for purposes of this subsection. "(3) CONTRIBUTION PERCENTAGE.—For purposes of paragraph

(2), the contribution percentage for a specified group of employees for a plan year shall be the average of the ratios (calculated separately for each employee in such group) of— "(A) the sum of the matching contributions and employee contributions paid under the plan on behalf of each such employee for such plan year, to "(B) the employee's compensation (within the m e a n i n g of section 414(s)) for such plan year.

Under regulations, an employer may elect to take into account (in computing the contribution percentage) elective deferrals and qualified nonelective contributions under the plan or any other plan of the employer.

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