Page:United States Statutes at Large Volume 96 Part 1.djvu/575

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 533

immediately before becoming permanently and totally disabled. This subparagraph shall only apply if contributions made with respect to such participant are nonforfeitable when made." (b) DEDUCTIBILITY.—Subparagraph (B) of section 404(a)(3) (relating 26 USC 404. to limits on deductible contributions to stock bonus and profitsharing trusts) is amended by adding at the end thereof the following: "The term 'compensation otherwise paid or accrued during the taxable year to all employees' shall include any amount with respect to which an election under section 415(c)(3)(C) is in effect, but only to the extent that any contribution with respect to such amount is nonforfeitable." (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 404 note, apply to taxable years beginning after December 31, 1981. SEC. 254. EXEMPTION FOR TRUSTS WHICH INCLUDE GOVERNMENTAL PLANS.

(a) IN GENERAL.—Section 401(a) (relating to requirements of quali- 26 USC 401. fication for qualified pension, profit-sharing, and stock bonus plans) is amended by inserting immediately after paragraph (23) the following new paragraph: "(24) Any group trust which otherwise meets the requirements of this section shall not be treated as not meeting such requirements on account of the participation or inclusion in such trust of the moneys of any plan or governmental unit described in section 805(d)(6)." (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 401 note. shall apply with respect to taxable years beginning after December 31, 1981.

Subtitle D—Taxation of Life Insurance Companies and Annuities PART I—COINSURANCE ARRANGEMENTS Subpart A—Modified Coinsurance Contracts SEC. 255. REPEAL OF OPTIONAL TREATMENT OF POLICIES REINSURED UNDER MODIFIED COINSURANCE CONTRACTS.

(a) REPEAL OF SECTION 820.—Section 820 (relating to optional 26 USC 820. treatment of policies reinsured under modified coinsurance contracts) is repealed. (b) CONFORMING AMENDMENTS.—

(1) Section 811 (relating to dividends to policyholders) is 26 USC 811. amended by adding at the end thereof the following new subsection: "(c) SPECIAL RULE FOR DIVIDENDS TO POLICYHOLDERS UNDER REINSURANCE CONTRACTS.—If, under the terms of a conventional coinsur-

ance contract, a life insurance company (hereinafter referred to as 'the reinsurer') is obligated to reimburse another life insurance company (hereinafter referred to as 'the reinsured') for dividends to policyholders on the policies reinsured, the amount of the deduction for dividends reimbursed shall, for purposes of section 809(d)(12), be Post, p. 534. equal to the amount of dividends to policyholders— "(1) which were paid by the reinsured, and

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