Page:United States Statutes at Large Volume 95.djvu/305

 PUBLIC LAW 97-34—AUG. 13, 1981

95 STAT. 279

plan to which the employee made one or more deductible employee contributions, "(B) such amount is received by the employee before the employee attains the age of 59 Va, and "(C) such amount is not attributable to such employee's becoming disabled (within the meaning of subsection (m)(7)), then the employee's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the amount so received to the extent that such amount is includible in gross income. For purposes of this title, any tax imposed by this paragraph shall be treated as a tax imposed by subsection (m)(5)(B). "(3) AMOUNTS CONSTRUCTIVELY RECEIVED.—

"(A) IN GENERAL.—For purposes of this subsection, rules similar to the rules provided by subsection (m)(4) and (8) shall apply. "(B) PURCHASE OF U F E INSURANCE.—To the extent any amount of accumulated deductible employee contributions of an employee are applied to the purchase of life insurance contracts, such amount shall be treated as distributed to the employee in the year so applied. "(4) SPECIAL RULE FOR TREATMENT OF ROLLOVER AMOUNTS.—For

purposes of sections 402(a)(5), 402(a)(7), 403(a)(4), 408(d)(3), and 26 USC 402. 409(b)(3)(C), the Secretary shall prescribe regulations providing for such allocations of amounts attributable to accumulated deductible employee contributions, and for such other rules, as may be necessary to insure that such accumulated deductible employee contributions do not become eligible for additional tax benefits (or freed from limitations) through the use of rollovers. "(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection— "(A) DEDUCTIBLE EMPLOYEE CONTRIBUTIONS.—The term 'deductible employee contributions' means any qualified voluntary employee contribution (as defined in section 219(e)(2)) Ante, p. 274. made after December 31, 1981, in a taxable year beginning after such date and allowable as a deduction under section 219(a) for such taxable year. "(B)

ACCUMULATED

DEDUCTIBLE

EMPLOYEE CONTRIBU-

TIONS.—The term 'accumulated deductible employee contributions' means the deductible employee contributions— "(i) increased by the amount of income and gain allocable to such contributions, and "(ii) reduced by the sum of the amount of loss and expense allocable to such contributions and the amounts distributed with respect to the employee which are attributable to such contributions (or income or gain allocable to such contributions). "(C) QuAUFiED EMPLOYER PLAN.—The term 'qualified employer plan' has the meaning given to such term by section 219(e)(3). "(D) GOVERNMENT PLAN.—The term 'government plan' has the meaning given such term by section 219(e)(4). "(6) ORDERING RULES.—Unless the plan specifies otherwise, any distribution from such plan shall not be treated as being made from the accumulated deductible employee contributions until all other amounts to the credit of the employee have been distributed."

89-194 O—82

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