Page:United States Statutes at Large Volume 102 Part 4.djvu/496

 102 STAT. 3466

PUBLIC LAW 100-647—NOV. 10, 1988 "(I) the applicable rate under the plan's method in effect under the plan on August 16, 1986, "(II) the highest rate (as of the date of the termination, transfer, or distribution) determined under any of the methods applicable under the plan at any time after August 15, 1986, and before the termination, transfer, or distribution in calculating the present value of the accrued benefit of an employee who is not a highly compensated employee under the plan (or any other plan used in determining whether the plan meets the requirements of section 401 of the Internal Revenue Code of 1986), or "(III) 5 percent, "(ii) EuGiBLE AMOUNT.—For purposes of clause (i), the term 'eligible amount' means any amount with respect to a highly compensated employee which— "(I) may be rolled over under section 402(a)(5) of such Code, "(II) is eligible for income avers^ng under section 402(e)(l) of such Code, or capital gains treatment under section 402(a)(2) or 403(a)(2) of such Code (as in effect before this Act), or "(III) may be transferred to another plan without inclusion in gross income. "(iii) AMOUNTS SUBJECT TO EARLY WITHDRAWAL OR EXCESS DISTRIBUTION TAX.—For purposes of sections 72(t) and 4980A of such Code, there shall not be taken into account the excess (if any) of— "(I) the amount distributed to a highly compensated employee by reason of such termination or distribution, over "(II) the amount determined by using the interest rate applicable under clause (i). "(iv)

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DISTRIBUTIONS OF ANNUITY CONTRACTS.—If an

annuity contract purchased after August 16, 1986, is distributed to a highly compensated em{)loyee in connection with such termination or distribution, there shall be included in gross income for the taxable year of such distribution an amount equal to the excess of— "(I) the purchase price of such contract, over "(II) the present value of the benefits payable under such contract determined by using the interest rate applicable under clause (i). Such excess shall not be taken into account for purposes of sections 72(t) and 4980A of such Code. "(v) HIGHLY COMPENSATED EMPLOYEE.—For purposes

of this subparagraph, the term 'highly compensated employee' has the meaning given such term by section 414(q) of such Code." (10) Section 413(b) of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(9)

PLANS COVERING A PROFESSIONAL EMPLOYEE.—Notwith-

standing subsection (a), in the case of a plan (and trust forming part thereof) which covers any professional employee, paragraph (1) shall be applied by substituting 'section 410(a)' for Section 410', and paragraph (2) shall not apply."

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