Page:United States Statutes at Large Volume 88 Part 1.djvu/1030

 986

26 USC 401.

Ante, p. 979. 26 USC 404.

PUBLIC LAW 93-406-SEPT. 2, 1974

plan and a defined contribution plan maintained by the same employer, and the sum of the defined benefit plan fraction and the defined contribution plan fraction for the year during which such date occurs exceeds 1.4, the sum of such fractions may continue to exceed 1.4 if— (A) the defined benefit plan fraction is not increased, by amendment of the plan or otherwise, after the date of enactment of this Act, and (B) no contributions are made under the defined contribution plan after such date. A trust which is part of a pension, profit-sharing, or stock bonus plan described in the preceding sentence shall not be treated as not constituting a qualified trust under section 401(a) of the Internal Revenue Code of 1954 on account of the provisions of section 415(e) of such Code, as long as it is described in the preceding sentence of this subsection. (b) L I M I T ON EMPLOYER DEDUCTIONS.—The second sentence of sec^[Q^ 4 0 4 (a)(3)(A) (relating to limits on deductible contributions) is amended by striking out "beneficiaries under the plan.'^ and inserting in lieu thereof "beneficiaries under the plan, but the amount so deductible under this sentence in any one succeeding taxable year together with the amount so deductible under the first sentence of this subparagraph shall not exceed 25 percent of the compensation otherwise paid or accrued during such taxable year to the beneficiaries under the plan.". (c)

26 USC 805.

26 USC 403.

[88 STAT.

CERTAIN A N N U I T Y AND BOND PURCHASE P L A N S. —

(1) Section 404(a)(2) (relating to the general rule for deduction for employee annuities) is amended by striking out " ( 1 5) " and inserting in lieu thereof "(15), (16), and (19)" and by striking out " (a)(9) and (10)" and inserting in lieu thereof " (a)(9), (10), (17),and (18)". (2) Section 405(a)(1) (relating to requirements for qualified bond purchase plans) is amended by striking out "and (8)," and inserting in lieu thereof " (8), (16), and (19)". (3) Section 805(d)(1)(C) (relating to pension plan reserves) is amended by striking out "and (15)" and inserting in lieu thereof "(15), (16), and (19)". (4) Section 403(b)(2) (relating to exclusion allowance) is amended to read as follows: "(2)

EXCLUSION ALLOWANCE.—

" (A) IN GENERAL.—For purposes of this subsection, the exclusion allowance for any employee for the taxable year is an amount equal to the excess, if any, of— " (i) the amount determined by multiplying 20 percent of his includible compensation by the number of years of service, over " (ii) the aggregate of the amounts contributed by the employer for annuity contracts and excludible from the gross income of the employee for any prior taxable year. " (B) ELECTION TO HAVE ALLOWANCE DETERMINED UNDER SECTION 415 RULES.—In the case of an employee who makes an

election under section 415(c)(4)(D) to have the provisions of section 4 1 5 (c)(4)(C) (relating to special rule for section 403(b) contracts purchased by educational institutions, hospitals, and home health service agencies) apply, the exclusion allowance for any such employee for the taxable year is the amount which could be contributed (under section 415) by his employer under a plan described in section 403(a) if the

�