Page:United States Statutes at Large Volume 100 Part 3.djvu/667

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2475

"(A) when the employee attains age 59 ¥2, separates from service, dies, or becomes disabled (within the meaning of section 72(m)(7)), or "(B) in the case of hardship. Such contract may not provide for the distribution of any income attributable to such contributions in the case of hardship." (2) CUSTODIAL ACCOUNTS.—Clause (ii) of section 403(b)(7) (relating to amounts treated as contributions) is amended by inserting "in the case of contributions made pursuant to a salary reduction agreement (within the meaning of section 3121(a)(1)(D))," before "encounters". (d) TECHNICAL AMENDMENTS.—

(1) Subparagraph (A) of section 72(m)(5) is amended to read as follows: "(A) This paragraph applies to amounts which are re'; ceived from a qualified trust described in section 401(a) or under a plan described in section 403(a) at any time by an individual who is, or has been, a 5-percent owner, or by a ' successor of such an individual, but only to the extent such amounts are determined, under regulations prescribed by the Secretary, to exceed the benefits provided for such individual under the plan formula." (2) Subsection (f) of section 408 is hereby repealed. (e) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 1986. (2) SUBSECTION (C).—The amendments made by subsection (c) ' shall apply to taxable years beginning after December 31, 1988. (3) EXCEPTION WHERE DISTRIBUTION COMMENCES.—The amendments made by this section shall not apply to distributions to ^ any employee from a plan maintained by any employer if— ^ (A) as of March 1, 1986, the employee separated from service with the employer, • (B) as of March 1, 1986, the accrued benefit of the employee was in pay status pursuant to a written election providing a specific schedule for the distribution of the entire accrued benefit of the employee, and ^(C) such distribution is made pursuant to such written t election. (4) TRANSITION RULE.—The amendments made by this section which a designation is in effect under section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982. SEC. 1124. ELECTION TO TREAT CERTAIN LUMP SUM DISTRIBUTIONS RECEIVED DURING 1987 AS RECEIVED DURING 1986.
 * shall not apply with respect to any benefits with respect to

(a) IN GENERAL.—If an employee separates from service during 1986 and receives a lump sum distribution (within the meaning of section 402(e)(4)(A) of such Code) after December 31, 1986, and before March 16, 1987, on account of such separation from service, then, for purposes of the Internal Revenue Code of 1986, such employee may elect to treat such lump sum distribution as if it were received when such employee separated from service. (b) SPECIAL RULE FOR TERMINATED PLAN.—In the case of an employee who receives a distribution from a terminated plan which

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