Page:United States Statutes at Large Volume 76.djvu/866

 818

68A Stat. 138; ^*26''uscf404

Ante, p. 816.

PUBLIC LAW 87-792-OCT. 10, 1962

[76 STAT.

" (A) under the plan such contribution is required to be applied (directly or through a trustee) to pay premiums or other consideration for one or more annuity, endowment, or life insurance contracts on the life of such owner-employee issued under the plan, " (B) the amount of such contribution exceeds the amount deductible under section 404 (determined without regard to section 404(a) (10)) with respect to contributions made by the employer on behalf of such owner-employee under the plan, and ' " (C) the amount of such contribution does not exceed the average of the amounts which were deductible under section 404 (determined without regard to section 404(a) (10)) with respect to contributions made by the employer on behalf of such owner-employee under the plan (or which would have been deductible under such section if such section had been in effect) for the first 3 taxable years (i) preceding the year in which the last such annuity, endowment^ or life insurance contract was issued under the plan and (li) in which such owner-employee derived earned income from the trade or business with respect to which the plan is established, or for so many of such taxable years as such owner-employee was engaged in such trade or business and derived earned income therefrom. I n the case of any individual on whose behalf contributions described in subparagraph (A) are made under more than one plan as an owner-employee during any taxable year, the preceding sisntence shall not apply if the amount of such contributions under all such plans for such taxable year exceeds $2,500. Any contribution which is not considered to be an excess contribution by reason of the application of this paragraph shall, for purposes of subparagraphs (B) (ii), ( i i i), and (iv) of p?iragraph (1), be taken into account as a contribution made by such owner-employee as an employee to the extent that the amount of such contribution is not deductible under section 404 (determined without regard to section 404(|a) (10)) for the taxable year, but only for the purpose of applying such subparagraphs to other contributions made by such owner-employee as an employee. ' (f) CERTAIN CUSTODIAL ACCOUNTS.— "(1) TREATMENT AS QUALIFIED TRUST.—For

purposes of this title, a custodial account shall be treated as a qualified trust under this section, if— " (A) such custodial account would, except for the fact that it is not a trust, constitute a qualified trust under this section; " (B) the custodian is a bank (as defined in subsection

Ante, p. 812.

(d)(1));

" (C) the investment of the funds in such account (including all earnings) is to be made— " (i) solely in regulated investment company stock with respect to which an employee is the beneficial owner, or "(ii) solely in annuity, endowment, or life insurance contracts issued by an insurance company; " (D) the shareholder of record of any such stock described in subparagraph (C)(i) is the custodian or its nominee; and " (E) the contracts described in subparagraph (C) (ii) are held by the custodian until distributed under the plan. For purposes of this title, in the case of a custodial account treated as a qualified trust under this section by reason of the preceding

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