Page:United States Statutes at Large Volume 102 Part 4.djvu/504

 102 STAT. 3474

26 USC 402 note.

PUBLIC LAW 100-647—NOV. 10, 1988 (C) Subsection (a)(6)(C) is amended by striking out "paragraph (2) of subsection (a), and". (D) Subsection (a)(BXEXii) is amended by striking out "paragraph (2) of subsection (a), and" and by striking out the comma after "subsection (e)". (E) Subsection (e)(l)(A) is amended by striking out "ordinary income portion of a". (F) Subsection (e)(4)(A) is amended— (i) by striking out "Except for purposes of subsection (a)(2) and section 403(a)(2), a" and inserting in Heu thereof "A", and (ii) by striking out "subsection (a)(2) of this section, and subsection (a)(2) of section 403,". (G) Subparagraph (L) of subsection (e)(4) is hereby repealed. (H) Subsection (e)(4)(M) is amended by striking out ", subsection (a)(2) of this section, and section 403(a)(2). (I) Subsection (e)(5) is amended by striking out "and paragraph (2) of subsection (a)". (J) Subsection (e)(6)(C) is amended to read as follows: "(C) SPECIAL LUMP-SUM TREATMENT,—For purposes of this paragraph, special lump sum treatment applies to any distribution if any portion of such distribution is taxed under this subsection by reason of an election under paragraph (4)(B)." (9)(A) Section 72(e)(7) of the 1986 Code is hereby repealed. (B) Section 72(e)(5)(D) is amended by striking out "paragraphs (7) and (8)" and inserting in lieu thereof "paragraph (8)". (C) Section 72(e)(8)(A) is amended by striking out "(other than paragraph (7))". (D) Section 72(q)(2)(E) of the 1986 Code is amended by striking out "(determined without regard to subsection (e)(7))". (10) Section 402(e)(l)(B) of the 1986 Code (relating to amount of tax on lump-sum distributions) is amended by adding at the end thereof the following new flush sentence: "For purposes of the preceding sentence, in determining the amount of tax under section 1(c), section 1(g) shall be applied without regard to paragraph (2)(B) thereof." (11) Section 1122(h) of the Reform Act is amended by adding at the end thereof the following new paragraph: "(9) SPECIAL RULE FOR STATE PLANS.—In the case of a plan maintained by a State which on May 5, 1986, permitted withdrawal by the employee of employee contributions (other than as an annuity), section 72(e) of the Internal Revenue Code of 1986 shall be applied— "(A) without regard to the phrase 'before separation from service' in paragraph (8)(D), and "(B) by treating any amount received (other than as an annuity) before or with the 1st annuity payment as having been received before the annuity starting date." (12) Subparagraph (B) of section 1122(h)(2) of the Reform Act is amended by inserting ", except that section 72(b)(3) of the Internal Revenue Code of 1986 (as added by such subsection) shall apply to individuals whose annuity starting date is after July 1, 1986" after "1986". (13) Sections 1122(h)(3)(C) and (h)(4)(C) of the Reform Act are each amended by striking out "with respect to any other lump

�