Page:United States Statutes at Large Volume 111 Part 1.djvu/1087

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 1063 (e) TECHNICAL CORRECTION. —Section 1144(c) of the Social Security Act (42 U.S.C. 1320b-14(c)) is amended by redesignating paragraph (9) as paragraph (8). SEC. 1504. MODIFICATION OF 403(b) EXCLUSION ALLOWANCE TO CON- FORM TO 415 MODIFICATIONS. (a) DEFINITION OF COMPENSATION.— (1) IN GENERAL. —Section 403(b)(3) (defining includible compensation) is amended by adding at the end the following: "Such term includes— "(A) any elective deferral (as defined in section 402(g)(3)), and "(B) any amount which is contributed or deferred by the employer at the election of the employee and which is not includible in the gross income of the employee by reason of section 125 or 457.". (2) EFFECTIVE DATE. —The amendment made by this sub- 26 USC 403 note. section shall apply to years beginning after December 31, 1997. (b) REPEAL OF RULES IN SECTION 415(e). —The Secretary of the Treasury shall modify the regulations regarding the exclusion allowance under section 403(b)(2) of the Internal Revenue Code of 1986 to reflect the amendment made by section 1452(a) of the Small Business Job Protection Act of 1996. Such modification shall Effective date. take effect for years beginning after December 31, 1999. SEC. 1505. EXTENSION OF MORATORIUM ON APPLICATION OF CERTAIN NONDISCRIMINATION RULES TO STATE AND LOCAL GOVERNMENTS. (a) GENERAL NONDISCRIMINATION AND PARTICIPATION RULES. — (1) NONDISCRIMINATION REQUIREMENTS.— Section 401(a)(5) (relating to qualified pension, profit-sharing, and stock bonus plans) is amended by adding at the end the following: " (G) STATE AND LOCAL GOVERNMENTAL PLANS.—Paragraphs (3) and (4) shall not apply to a governmental plan (within the meaning of section 414(d)) maintained by a State or locfd government or political subdivision thereof (or agency or instrumentality thereof).". (2) ADDITIONAL PARTICIPATION REQUIREMENTS.— Section 401(a)(26)(H) (relating to additional participation requirements) is amended to read as follows: "(H) EXCEPTION FOR STATE AND LOCAL GOVERNMENTAL PLANS.—This paragraph shall not apply to a governmental Elan (within the meaning of section 414(d)) maintained y a State or local government or political subdivision thereof (or agency or instrumentality thereof).". (3) MINIMUM PARTICIPATION STANDARDS. — Section 410(c)(2) (relating to application of participation standards to certain plans) is amended to read as follows: "(2) A plan described in paragraph (1) shall be treated as meeting the requirements of this section for purposes of section 401(a), except that in the case of a plan described in subparagraph (B), (C), or (D) of paragraph (1), this paragraph shall apply only if such plan meets the requirements of section 401(a)(3) (as in effect on September 1, 1974).". (b) PARTICIPATION AND DISCRIMINATION STANDARDS FOR QUALI- FIED CASH OR DEFERRED ARRANGEMENTS.— Section 401(k)(3) (relating to application of participation and discrimination standards) is amended by adding at the end the following:

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