Page:United States Statutes at Large Volume 92 Part 3.djvu/153

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2785

subsection (b)(1), a cafeteria plan which provides health benefits shall not be treated as discriminatory if— "(A) contributions under the plan on behalf of each participant include an amount which— "(i) equals 100 percent of the cost of the health benefit coverage under the plan of the majority of the highly compensated participants similarly situated, or "(ii) equals or exceeds 75 percent of the cost of the health benefit coverage of the participant (similarly situated) having the highest cost health benefit coverage under the plan, and "(B) contributions or benefits under the plan in excess of those described in subparagraph (A) bear a uniform relationship to compensation. "(3) CERTAIN PARTICIPATION ELIGIBILITY RULES NOT TREATED AS
 * '(2) HEALTH BENEFITS.—For purposes of subparagraph (B) of

DISCRIMINATORY.—For purposes of subparagraph (A) of subsection (b)(1), a classification shall not be treated as discriminatory if the plan— "(A) benefits a group of employees described in subparagraph (B) of section 410(b)(1), and 26 USC 410. "(B) meets the requirements of clauses (i) and (ii): "(i) No employee is required to complete more than 3 years of employment with the employer or employers maintaining the plan as a condition of participation in the plan, and the service requirement for each employee is the same. "(ii) Any employee who has satisfied the employment requirement of clause (i) and who is otherwise entitled to participate in the plan commences participation no later than the first day of the first plan year beginning after the date the service requirement was satisfied unless the employee was separated from service before the first day of that plan year. "(4) CERTAIN CONTROLLED GROUPS.—All employees who

are

treated as employed by a single employer under subsection (b) or (c) of section 414 shall be treated as employed by a single 26 USC 414. employer for purposes of this section. "(h) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section." (b) CLERICAL AMENDMENT.—The table of sections for part III of subchapter B of chapter 1 is amended by striking out the item relating to section 124 and inserting in lieu thereof the following: "Sec. 125. Cafeteria plans. "Sec. 126. Cross references to other Acts." EFFECTIVE DATE.—The amendments

(c) made by this section shall 26 USC 125 apply to taxable years beginning after December 31, 1978, "^te. SEC. 135. CERTAIN CASH OR DEFERRED ARRANGEMENTS. (a) IN GENERAL.—Section 401 (relating to qualified pension, profit- 26 USC 401. sharing, and stock bonus plans) is amended by redesignating subsection (k) as (1) and by inserting after subsection (j) the following new subsection: "(k) CASH OR DEFERRED ARRANGEMENTS,— "(1) GENERAL RULE.—A profit-sharing or

stock bonus plan shall not be considered as not satisfying the requirements of subsec-

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