Page:United States Statutes at Large Volume 100 Part 3.djvu/661

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PUBLIC LAW 99-000—MMMM. DD, 1986

PUBLIC LAW 99-514—OCT. 22, 1986 '

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"(9)

100 STAT. 2469

TREATMENT OF EMPLOYEE CONTRIBUTIONS AS SEPARATE

CONTRACT.—Any employee contributions (and any income allocable thereto) under a defined contribution plan shall be treated as a separate contract for purposes of this subsection." (B) CONFORMING AMENDMENT.—Subparagraph (D) of section 72(e)(5) is amended by striking out "paragraph (7)" and inserting in lieu thereof "paragraphs (7) and (8)".

(d) BENEFICIARY OF QUALIFIED ANNUITIES TAXED ONLY WHEN AMOUNTS ACTUALLY RECEIVED.—

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(1) Paragraph (1) of section 403(a) (relating to taxability of beneficiary under a qualified annuity plan) is amended to read as follows: "(1) DISTRIBUTEE TAXABLE UNDER SECTION 72.—If an annuity contract is purchased by an employer for an employee under a plan which meets the requirements of section 404(a)(2) (whether or not the employer deducts the amounts paid for the contract under such section), the amount actually distributed to any distributee under the contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities)." (2) The second sentence of section 4030t))(l) (relating to taxability of beneficiary under annuity purchased by section 501(c)(3) organization or public school) is amended to read as follows: "The amount actually distributed to any distributee under such contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities)." (3) The last sentence of section 403(c) (relating to taxability of beneficiary under nonqualified annuities or under annuities purchased by exempt organizations) is amended to read as follows: "In the case of any portion of any contract which is attributable to premiums to which this subsection applies, the amount actually paid or made available under such contract to any beneficiary which is attributable to such premiums shall be taxable to the beneficiary (in the year in which so paid or made available) under section 72 (relating to annuities)." (e) SPECIAL RULES FOR ROLLOVER DISTRIBUTIONS.— (1) PARTIAL ROLLOVERS.—Clause (i) of section

402(a)(5)(D) (relating to requirements for partial distributions) is amended to read as follows: X "(i) REQUIREMENTS.—Subparagraph (A) shall apply to a partial distribution only if the employee elects to f,. v. ^ have subparagraph (A) apply to such distribution and such distribution would be a lump sum distribution if I subsection (e)(4)(A) were applied— "(I) by substituting '50 percent of the balance to the credit of an employee' for 'the balance to the ,,; y credit of an employee', "(II) without regard to clause (ii) thereof, the sr I- / second sentence thereof, and subparagraph (B) of subsection (e)(4). Any distribution described in section 401(a)(28)(B)(ii) shall be treated as meeting the requirements of this i clause." (2) EXTENSION OF ROLLOVER PERIOD FOR FROZEN DEPOSITS —