Page:United States Statutes at Large Volume 88 Part 1.djvu/1026

 982

PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

(paragraph (2)) to the participant's account, such annual addition is greater than the lesser of— " (A) $25,000, or " (B) 25 percent of the participant's compensation. "(2) ANNUAL ADDITION.—For purposes of paragraph (1), the

„.^"'^'PP-^/^' ' '

26 USC 401.

term 'annual addition' means the sum for any year of— " (A) employer contributions, " (B) the lesser of— "(i) the amount of the employee contributions in excess of 6 percent of his compensation, or "(ii) one-half of the employee contributions, and " (C) forfeitures. For the purposes of this paragraph, employee contributions under subparagraph (B) are determined without regard to any rollover contributions (as defined in sections 402fa)(5), 403(a)(4), 408(d)(3), and 4 0 9 (b)(3)(C)). "(3) PARTICIPANT'S COMPENSATION.—For purposes of paragraph (1), the term 'participant's compensation' means the compensation of the participant from the employer for the year. In YiQ case of an employee within the meaning of section 401(c)(1), the preceding sentence shall be applied by substituting for 'compensation of the participant from the employer' the following: 'the participant's earned income (within the meaning of section 401(c)(2) but determined without regard to any exclusion under section 911)'. "(4)

SPECIAL

ELECTION

FOR SECTION

403(b)

CONTRACTS

PUR-

C H A S E D BY E D U C A T I O N A L INSTITUTIONS, HOSPITALS, AND HOME HEALTH SERVICE AGENCIES.—

26 USC 403.

Post, p. 986.

" (A) I n the case of amounts contributed for an annuity contract described in section 403(b) for the year in which occurs a participant's separation from the service with an educational institution, a hospital, or a home health service agency, at the election of the participant there is substituted for the amount specified in paragraph (1)(B) the amount of the exclusion allowance which would be determined under section 403(b)(2) (without regard to this section) for the participant's taxable year in which such separation occurs if the participant's years of service were computed only by taking into account his service for the employer during the period of years (not exceeding ten) ending on the date of such separation. " (B) I n the case of amounts contributed for an annuity contract described in section 403(b) for any year in the case of a participant who is an employee of an educational institution, a hospital, or a home health service agency, at the election of the participant there is substituted for the amount specified in paragraph (1)(B) the least of— "(i) 25 percent of the participant's includible compensation (as defined in section 403(b)(3)) plus $4,000, "(ii) the amount of the exclusion allowance determined for the year under section 403(b)(2), or "(iii) $15,000. " (C) I n the case of amounts contributed for an annuity contract described in section 403(b) for any year for a participant who is an employee of an educational institution, a hospital, or a home health service agency, a t the election of the participant the provisions of section 403(b)(2)(A) shall not apply.

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