Page:United States Statutes at Large Volume 76.djvu/869

 76 STAT.]

PUBLIC LAW 87-792-OCT. 10, 1962

821

subsection (a) (10)) shall not exceed $2,500, or 10 percent of the earned income derived by such employee from the trades or businesses with respect to which the plans are established, whichever is the lesser. " (B) ALLOCATION or AMOUNTS DEDUCTIBLE.—In any case in which the amounts deductible under subsection (a) (with the application of the limitations of this subsection) with respect to contributions made on behalf of an employee within the meaning of section 401(c)(1) under two or more plans are, by reason of subparagraph (A), less than the amounts deductible under such subsection determined without regard to such subparagraph, the amount deductible under subsection (a) (determined without regard to paragraph (10) thereof) with respect to such contributions under each such plan shall be determined in accordance with regulations prescribed by the Secretary or his delegate. "(3)

Ante, p. sii.

CONTRIBUTIONS ALLOCABLE TO INSURANCE PROTECTION.—

For purposes of this subsection, contributions which are allocable (determined under regulations prescribed by the Secretary or his delegate) to the purchase of life, accident, health, or other insurance shall not be taken into account. " (f) CERTAIN LOAN REPAYMENTS CONSIDERED AS CONTRIBUTIONS.—

For purposes of this section, any amount paid, directly or indirectly, by an owner-employee (within the meaning of section 401(c)(3)) in repayment of any loan which under section 72(m)(4)(B) was treated as an amount received under a contract purchased by a trust describe;d in section 401(a) which is exempt from tax under section 501(a) or purchased as a part of a plan described in section 403(a) shall be treated as a contribution to which this section applies on behalf of such owner-employee to such trust or to or under such plan." SEC. 4. TAXABILITY OF DISTRIBUTIONS. (a)

EMPLOYEES' ANNUITIES,—Section 7 2 (d)(2)

Ante, p..812. Post, p.823.

26 USC 401, 501, 403.

of the Internal

Revenue Code of 1954 (relating to employees' annuities) is amended to read as follows: "(2) SPECIAL RULES FOR APPLICATION OF PARAGRAPH (i).—For purposes of paragraph (1)— " (A) if the employee died before any amount was received as an annuity under the contract, the words 'receivable by the employee' shall be read as 'receivable by a beneficiary of the employee'; and " (B) any contribution made with respect to the contract while the employee is an employee within the meaning of section 401(c)(1) which is not allowed as a deduction under section 404 shall be treated as consideration for the contract contributed by the employee."

26 USC 72.

26 u§c 404.

(b) SPECIAL RULES RELATING TO SELF-EMPLOYED INDIVIDUALS AND

OWNER-EMPLOYEES.—Section 72 of the Internal Revenue Code of 1954 (relating to annuities, etc.) is amended by redesignating sub- 26 USC 72. section (m) as subsection (o) and by inserting after subsection (1) the following new subsections: ' ' (m) SPECIAL RULES APPLICABLE TO EMPLOYEE ANNUITIES AND D I S TRIBUTIONS UNDER EMPLOYEE PLANS.— " (1) CERTAIN AMOUNTS RECEIVED BEFORE ANNUITY STARTING

DATE.—Any amounts received under an annuity, endowment, or life insurance contract before the annuity starting date which are not received as an annuity (within the meaning of subsection (e)(2)) shall be included in the recipient's gross income for the taxable year in which received to the extent that—

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