Page:United States Statutes at Large Volume 76.djvu/868

 PUBLIC LAW 87-792-OCT. 10, 1962

820

be computed, with respect to contributions on behalf of employees (other than employees within the meaning of section 4 0 1 (c)(1)), as if such employees were the only employees for whom contributions and benefits are provided under the plan; " (B) the limitations provided by paragraphs (1), (2), (3), and (7) on the amounts deductible for any taxable year shall be computed, with respect to contributions on behalf of employees within the meaning of section 401(c)(1) — "(i) as if such employees were the only employees for whom contributions and benefits are provided under the plan, and " (ii) without regard to paragraph (1)(D), the second and third sentences of paragraph (3), and the second sentence of paragraph (7); and " (C) the amounts deductible under paragraphs (1), (2), (3), and (7), with respect to contributions on behalf of any employee within the meaning of section 401(c)(1), shall not exceed the applicable limitation provided in suDsection (e).

Ante, p.811.

Infra.

"(10)

26 USC 401.

[76 STAT.

SPECIAL LIMITATION ON AMOUNT ALLOWED AS DEDUCTION

FOR SELF-EMPLOYED INDIVIDUALS.—Notwithstanding any other provision of this section, the amount allowable as a deduction under paragraphs (1), (2), (3), and (7) in any taxable year with respect to contributions made on behalf of an individual who is an employee within the meaning of section 401(c)(1) shall be an amount equal to one-half of the contributions made on behalf of such individual in such taxable year which are deductible under such paragraphs (determined with the application of paragraph (9) and of subsection (e) but without regard to this paragraph). For purposes of section 401, the amount which may be deducted, or the amount deductible, under this section with respect to contributions made on behalf of such individual shall be determined without regard to the preceding sentence." (b)

LIMITATIONS ON DEDUCTIBLE CONTRIBUTIONS ON B E H A L F OF

SELF-EMPLOYED INDIVIDUALS.—Section 404 of the Internal Revenue

26 USC 404.

Code of 1954 (relating to the deductibility of contributions to pension, annuity, profit-sharing, or stock bonus plans or plans of deferred compensation) is amended by adding after subsection (d) the following new subsections: "(e)

SPECIAL LIMITATIONS F R SELF-EMPLOYED INDIVIDUALS.— O

"(1) IN GENERAL.—In the case of a plan included in subsection (a)(1), (2), or (3), which provides contributions or benefits for employees some or all of whom are employees within the meaning of section 401(c)(1), the amounts deductible under subsection (a) (determined without regard to paragraph (10) thereof) in any taxable year with respect to contributions on behalf of any employee within the meaning of section 401(c)(1) shall, subject to the provisions of paragraph (2), not exceed $2,500, or 10 percent of the earned income derived by such employee from the trade or business with respect to which the plan is established, whichever is the lesser. "(2)

CONTRIBUTIONS MADE UNDER MORE THAN ONE PLAN.— " (A) OVERALL LIMITATION.—In any taxable year in which

amounts are deductible with respect to contributions under two or more plans on behalf of an individual who is an employee within the meaning of section 401(c)(1) with respect to such plans, the aggregate amount deductible for such taxable year under all such plans with respect to contributions on behalf of such employee (determined without regard to

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