Page:United States Statutes at Large Volume 72 Part 1.djvu/1664

 1622 26 USC 403.

26 USC 72.

PUBLIC LAW b5-866-8EPT. 2, 1958

[72 S T A T.

(b) QUALIFIED PLANS.—Section 403(a)(1) (relating to taxability of beneficiary under a qualified annuity plan) is amended to read as follows: "(1) GENERAL RULE.—Except as provided in paragraph (2), if an annuity contract is purchased by an employer for an employee under a plan which meets the requirements of section 404 (a)(2) (whether or not the employer deducts the amounts paid for the contract under such section)j the employee shall include in his gross income the amounts received undai' such contract for the year received as provided in section 72 (relating to annuities) except that section 72(e)(3) shall not apply." (c) (^ERTAIN FORFEITAHLE CONTRACTS P U R C H A S E D BY E X E M P TO R -

CXANIZATIONS.—Section 403 is amended by adding after subsection (c) (as redesignated by subsection (a) of this section) the following new subsection: "(d) TAXABILITY OF BENEFICIARY I'NDER CERTAIN FORFEITABLE CONTRACTS PURCHASED BY EXEMPT ORGANIZATIONS.—Notwithstanding

the first sentence of subsection (c), if rights of an employee under an annuity contract purchased by an employer which is exempt from tax 26 USC 501,521. under section 501(a) or 521 (a) change from forfeitable to nonforfeitable rights, the value of such contract on the date of such change (to the extent attributable to amounts contributed by the employer after December 31, 1957) shall, except as provided in subsection (b), be included in the gross income of the employee in the year of such change.'' 26 USC loi.

(^^^ AMOUNTS RECEIM-^D AS DEATH BENEFITS.—Section 101(b)

(2)

(B) (relating to nonforfeitable rights) is amended to read as follows: " (B) NONFORFEITABLE RIGHTS.—Paragraph (1) shall not apply to amounts with respect to which the employee possessed, inmiediately before his death, a nonforfeitable right to receive the amounts while living. This subparagraph shall not apply to total distributions payable (as defined in 26 USC 402. section 402(a)(3)) which are paid to a distributee within one taxable year of the distributee by reason of the employee's death— "(i) by a stock bonus, pension, or profit-sharing trust described in section 401(a) which is exempt from tax 26 USC 40i,5oi. under section 501(a), "(ii) under an annuity contract under a plan which meets the requirements of paragraphs (3), (4), (5), and (6) of section 401(a), or "(iii) under an annuity contract purchased by an employer which is an organization referred to in section 26 USC 503. 503 (b)(1), (2), or (3) and which is exempt from tax under section 501(a), but only with respect to that portion of such total distributions payable which bears the same ratio to the amount of such total distributions payable which is (without regard to this subsection) includible in gross income, as the amounts contributed by the employer for such annuity contract which are excludable 26 USC 403. from gross income under section 403(b) bear to the total amounts contributed by the employer for such annuity contract.'' 26 USC 2039. (e) EXCLUSION FROM GROSS ESTATE.—Section 2030(c) (relating to exemption of annuities under certain trusts and plans) is amended— (1) by striking out "or" at the end of paragraph (1), and by striking out the period at the end of paragraph (2) and inserting in lieu thereof "; or";

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