Page:United States Statutes at Large Volume 103 Part 3.djvu/286

 103 STAT. 2354 PUBLIC LAW 101-239—DEC. 19, 1989 "(6) SPECIAL RULE FOR EMPLOYEE STOCK OWNERSHIP PLANS. — If no more than one-third of the employer contributions to an ' employee stock ownership plan (as described in section 4975(e)(7)) for a year which are deductible under paragraph (9) of section 404(a) are allocated to highly compensated employees (within the meaning of section 414(q)), the limitations imposed by this section shall not apply to— "(A) forfeitures of employer securities (within the mean- ing of section 409) under such an employee stock ownership .? plan if such securities were acquired with the proceeds of a loan (as described in section 404(a)(9)(A)), or "(B) employer contributions to such an employee stock ownership plan which are deductible under section 404(a)(9)(B) and charged against the participant's account." 26 USC 415 note. (2) EFFECTIVE DATE.— The amendment made by this subsection shall apply to years beginning after July 12, 1989. (d) SPECIAL RULES RELATING TO NET OPERATING LOSSES.— (1) IN GENERAL.— Section 382(1)(3) is amended by striking subparagraph (C) and by redesignating subparagraph (D) as subparagraph (C). 26 USC 382 note. (2) EFFECTIVE DATE.—The amendments made by this subsec- tion shall apply to acquisitions of employer securities after July 12, 1989, except that such amendments shall not apply to acquisitions after July 12, 1989, pursuant to a written binding contract in effect on July 12, 1989, and at all times thereafter before such acquisition. PART II—SECTION 401(H) ACCOUNTS SEC. 7311. LIMITATION ON CONTRIBUTIONS TO SECTION 401(h) ACCOUNTS. (a) IN GENERAL.— Section 401(h) is amended by adding at the end thereof the following new sentence: "In no event shall the require- ments of paragraph (1) be treated as met if the aggregate actual contributions for medical benefits, when added to actual contribu- tions for life insurance protection under the plan, exceed 25 percent of the total actued contributions to the plan (other than contribu- tions to fund past service credits) after the date on which the account is established." 26 USC 401 note. (b) EFFECTIVE DATE.— (1) IN GENERAL.—The amendment made by this section shall apply to contributions after October 3, 1989. (2) TRANSITION.— The amendment made by this section shall not apply to contributions made before January 1, 1990, if— (A) the employer requested before October 3, 1989, a private letter ruling or determination letter with respect to the qualification of the plan maintaining the account under t section 401(h) of the Internal Revenue Code of 1986, (B) the request sets forth a method under which the amount of contributions to the account are to be deter- mined on the basis of cost, (C) such method is permissible under section 401(h) of such Code under the provisions of General Counsel Memo- randum 39785, and (D) the Internal Revenue Service issued before October 4, 1989, a private letter ruling, determination letter, or other letter providing that the specific plan involved qualifies

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