Page:United States Statutes at Large Volume 120.djvu/1008

 PUBLIC LAW 109–280—AUG. 17, 2006

120 STAT. 977

‘‘(A) IN GENERAL.—For purposes of subsection (d)(23), the term ‘correction period’ means the 14-day period beginning on the date on which the disqualified person discovers, or reasonably should have discovered, that the transaction would (without regard to this paragraph and subsection (d)(23)) constitute a prohibited transaction. ‘‘(B) EXCEPTIONS.— ‘‘(i) EMPLOYER SECURITIES.—Subsection (d)(23) does not apply to any transaction between a plan and a plan sponsor or its affiliates that involves the acquisition or sale of an employer security (as defined in section 407(d)(1)) or the acquisition, sale, or lease of employer real property (as defined in section 407(d)(2)). ‘‘(ii) KNOWING PROHIBITED TRANSACTION.—In the case of any disqualified person, subsection (d)(23) does not apply to a transaction if, at the time the transaction is entered into, the disqualified person knew (or reasonably should have known) that the transaction would (without regard to this paragraph) constitute a prohibited transaction. ‘‘(C) ABATEMENT OF TAX WHERE THERE IS A CORRECTION.—If a transaction is not treated as a prohibited transaction by reason of subsection (d)(23), then no tax under subsections (a) and (b) shall be assessed with respect to such transaction, and if assessed the assessment shall be abated, and if collected shall be credited or refunded as an overpayment. ‘‘(D) DEFINITIONS.—For purposes of this paragraph and subsection (d)(23)— ‘‘(i) SECURITY.—The term ‘security’ has the meaning given such term by section 475(c)(2) (without regard to subparagraph (F)(iii) and the last sentence thereof). ‘‘(ii) COMMODITY.—The term ‘commodity’ has the meaning given such term by section 475(e)(2) (without regard to subparagraph (D)(iii) thereof). ‘‘(iii) CORRECT.—The term ‘correct’ means, with respect to a transaction— ‘‘(I) to undo the transaction to the extent possible and in any case to make good to the plan or affected account any losses resulting from the transaction, and ‘‘(II) to restore to the plan or affected account any profits made through the use of assets of the plan.’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to any transaction which the fiduciary or disqualified person discovers, or reasonably should have discovered, after the date of the enactment of this Act constitutes a prohibited transaction.

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26 USC 4975 note.

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