88 STAT. ]
PUBLIC LAW 93-406-SEPT. 2, 1974
98^
annuity contract for the benefit of such employee were treated as a defined contribution plan maintained by the employer.", (d) EFFECTIVE DATE.— note."^"" " ' ' (1) GENERAL RULE.—The amendments made by this section shall apply to years beginning after December 31, 1975. The Secretary of the Treasury shall prescribe such regulations as may be necessary to carry out the provisions of this paragraph. (2)
TRANSITION RULE FOR DEFINED BENEFIT PLANS.—In
the
case of an individual who was an active participant in a defined benefit plan before October 3, 1973, if— (A) the annual benefit (within the meaning of section 415(b)(2) of the Internal Revenue Code of 1954) payable to such participant on retirement does not exceed 100 percent of his annual rate of compensation on the earlier of (i) October 2, 1973, or (ii) the date on which he separated from the service of the employer, (B) such annual benefit is no greater than the annual benefit which would have been payable to such participant on retirement if (i) all the terms and conditions of such plan in existence on such date had remained in existence until such retirement, and (ii) his compensation taken into account for any period after October 2, 1973, had not exceeded his annual rate of compensation on such date, and (C) in the case of a participant who separated from the service of the employer prior to October 2, 1973, such annual benefit is no greater than his vested accrued benefit as of the date he separated from the service, then such annual benefit shall be treated as not exceeding the limitation of subsection (b) of section 415 of the Internal Revenue Code of 1954. SEC. 2005. TAXATION OF CERTAIN LUMP SUM DISTRIBUTIONS. (a) TREATMENT OF TOTAL DISTRIBUTIONS.—Section 402(e) (relat-
ing to certain plan terminations) is amended to read as follows: "'(e) TAX ON L U M P S U M DISTRIBUTIONS.— (1) IMPOSITION OF SEPARATE TAX ON LUMP SUM DISTRIBUTIONS.— " (A) SEPARATE TAX.—There is hereby imposed a tax (in
the amount determined under subparagraph (B)) on the ordinary income portion of a lump sum distribution. " (B) AMOUNT OF TAX.—The amount of tax imposed by
subparagraph (A) for any taxable year shall be an amount equal to the amount of the initial separate tax for such taxable year multiplied by a fraction, the numerator of which is the ordinary income portion of the lump sum distribution for the taxable year and the denominator of which is the total taxable amount of such distribution for such year. " (C) INITIAL SEPARATE TAX.—The initial separate tax for any taxable year is an amount equal to 10 times the tax which would be imposed by subsection (c) of section 1 if the recipient were an individual referred to in such subsection and the taxable income were an amount equal to one-tenth of the excess of— " (i) the total taxable amount of the lump sum distribution for the taxable year, over " (ii) the minimum distribution allowance.
Ante. ^.919.
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