Page:United States Statutes at Large Volume 100 Part 3.djvu/664

 100 STAT. 2472

PUBLIC LAW 99-514—OCT. 22, 1986 Internal Revenue Code of 1954 for taxable years beginning during 1986. (6) EXISTING CAPITAL GAIN PROVISIONS.—For purposes of paragraphs (3) and (4), the term 'existing capital gains provisions' means the provisions of paragraph (2) of section 402(a) of the Internal Revenue Code of 1954 (as in effect on the day before the date of the enactment of this Act) and paragraph (2) of section 403(a) of such Code (as so in effect). (7) SUBSECTION (d).—The amendments made by subsection (d) shall apply to taxable years beginning after December 31, 1985. (8) FROZEN DEPOSITS.—The amendments made by subsection (e)(2) shall apply to amounts transferred to an employee before, on, or after the date of the enactment of this Act, except that in the case of an amount transferred on or before such date, the 60-day period referred to in section 402(a)(5)(C) of the Internal Revenue Code of 1986 shall not expire before the 60th day after the date of the enactment of this Act.

SEC. 1123. UNIFORM ADDITIONAL TAX ON EARLY DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS.

(a) IN GENERAL.—Section 72 (relating to annuities; certain proceeds of endowment and life insurance contracts) is amended by redesignating subsection (t) as subsection (u) and by inserting after subsection (s) the following new subsection: "(t) 10-PERCENT ADDITIONAL TAX ON EARLY DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS.—

"(1) IMPOSITION OF ADDITIONAL TAX.—If any taxpayer receives

any amount from a qualified retirement plan (as defined in section 4974(c)), the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income. "(2) SUBSECTION NOT TO APPLY TO CERTAIN DISTRIBUTIONS.—

Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions: "(A) IN GENERAL.—Distributions which are— "(i) made on or after the date on which the employee
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attains age 59y2, '••i^'•• "(ii) made to a beneficiary (or to the estate of the employee) on or after the death of the employee, "(iii) attributable to the employee's being disabled ft,; within the meaning of subsection (m)(7), "(iv) part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his beneficiary, "(v) made to an employee after separation from service on account of early retirement under the plan after '" attainment of age 55, or "(vi) dividends paid with respect to stock of a corporation which are described in section 404(k). "(B) MEDICAL EXPENSES.—Distributions made to the em^ ployee (other than distributions described in subparagraph (A) or (O) to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for

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