Page:United States Statutes at Large Volume 95.djvu/306

 95 STAT. 280

PUBLIC LAW 97-34—AUG. 13, 1981 (2) 10-YEAR AVERAGING AND CAPITAL GAINS NOT TO APPLY.—

26 USC 402.

Ante, p. 278.

Subparagraph (A) of section 402(e)(4) (defining lump sum distribution) is amended by adding at the end thereof the following new sentence: "For purposes of this section and section 403, the balance to the credit of the employee does not include the accumulated deductible employee contributions under the plan (within the meaning of section 72(o)(5))." (3) CONFORMING AMENDMENTS RELATING TO ROLLOVER DISTRIBUTIONS.—

26 USC 402.

26 USC 403.

(A) Paragraph (5) of section 402(a) (relating to rollover amounts) is amended— (i) by inserting "(other than accumulated deductible employee contributions within the meaning of section 72(o)(5))" after "contributions" in subparagraph (B), (ii) by striking out "or" at the end of subparagraph (D)(i)(I), (iii) by striking out the period at the end of subparagraph (D)(i)(II) and inserting in lieu thereof ", or", and (iv) by inserting at the end of subparagraph (D) the following new subclause: "(III) which constitute a distribution of accumulated deductible employee contributions (within the meaning of section 72(o)(5))." (B) Paragraph (8) of section 403(b) (relating to rollover amounts) is amended by inserting ", or 1 or more distributions of accumulated deductible employee contributions (within the meaning of section 72(o)(5))" after "subsection (a)" in subparagraph (B)(i). (c) UNREAUZED APPRECIATION OF EMPLOYER SECURITIES.—

(1) Paragraph (1) of section 402(a) (relating to taxability of beneficiary of exempt trust) is amended by striking out in the second sentence thereof "by the employee" and inserting in lieu thereof "by the employee (other than deductible employee contributions within the meaning of section 72(o)(5))." (2) Subparagraph (J) of section 402(e) (relating to tax on lump sum distribution) is amended by adding at the end thereof the following new sentence: "This subparagraph shall not apply to distributions of accumulated deductible employee contributions (within the meaning of section 77(o)(5))." 26 USC 2039.

26 USC 2517.

26 USC 220.

(d) ESTATE AND GIFT TAX EXCLUSION.— (1) ESTATE TAX.—Subsection (c) of

section 2039 (relating to exemption of annuities under certain trusts and plans) is amended by adding at the end thereof the following new sentence: "For purposes of this subsection, any deductible employee contributions (within the meaning of paragraph (5) of section 72(o)) shall be considered as made by a person other than the decedent." (2) GIFT TAX.—Subsection (b) of section 2517 (relating to transfers attributable to employee contributions) is amended by adding at the end thereof the following new sentence: "For purposes of this subsection, any deductible employee contributions (within the meaning of paragraph (5) of section 72(o)) shall be considered as made by a person other than the employee." (e) REPEAL OF SECTION 220.—Section 220 (relating to deduction for retirement savings for certain married individuals) is hereby repealed.

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