Page:United States Statutes at Large Volume 100 Part 3.djvu/658

 100 STAT. 2466 J

PUBLIC LAW 99-514—OCT. 22, 1986 (4) TRANSITION RULES.—

(A) The amendments made by subsections (a) and (b) shall f . not apply with respect to any benefits with respect to which ,,., a designation is in effect under section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982. rv, (B)(i) Except as provided in clause (ii), the amendment made by subsection (b) shall not apply in the case of any individual who has attained age lOVz before January 1, 1988. (ii) Clause (i) shall not apply to any individual who is a 5,i ]:. percent owner (as defined in section 416(i) of the Internal sti '• Revenue Code of 1986), at any time during— (I) the plan year ending with or within the calendar year in which such owner attains age 66 V2, and (II) any subsequent plan year. SEC. 1122. TAXATION OF DISTRIBUTIONS.

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(a) LIMITATIONS ON SPECIAL AVERAGING PROVISIONS.— (1) AVERAGING PROVISIONS LIMITED TO 1 LUMP SUM DISTRIBU-

TION AFTER AGE 59 y2.—Subparagraph (B) of section 402(e)(4) (relating to election of lump sum treatment) is amended to read as follows: "(B) AVERAGING TO APPLY TO i LUMP SUM DISTRIBUTION

AFTER AGE 59¥2. —Paragraph (1) shall apply to a lump sum distribution with respect to an employee under subparagraph (A) only if— "(i) such amount is received on or after the taxpayer ' ' ' has attained age 59 y2, and "(ii) the taxpayer elects for the taxable year to have '/'' all such amounts received during such taxable year so treated. Not more than 1 election may be made under this subparagraph by any taxpayer with respect to any employee. No election may be made under this subparagraph by any J taxpayer other than an individual, an estate, or a trust. In ' • * the case of a lump sum distribution made with respect to an employee to 2 or more trusts, the election under this subparagraph shall be made by the personal representative of the taxpayer." (2)

5-YEAR AVERAGING IN UEU OF 10-YEAR AVERAGING.—

^^. Subparagraph (C) of section 402(e)(1) (relating to initial separate tax) is amended— (A) by striking out "10 times" and inserting in lieu thereof "5 times", and (B) by striking out "one-tenth" and inserting in lieu thereof" 1/5". (h) REPEAL OF CAPITAL GAINS TREATMENT.—

(1) IN GENERAL.—The following provisions are hereby repealed: (A) Paragraph (2) of section 402(a) (relating to capital gains treatment for portion of lump sum distribution). (B) Paragraph (2) of section 403(a) (relating to capital gains treatment for certain distributions). (2) TECHNICAL AMENDMENTS.—

(A) Clause (iii) of section 402(a)(5)(D) is amended to read as follows:

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