115 STAT. 104 PUBLIC LAW 107-16^JUNE 7, 2001 a portion of elective deferrals the employee is otherwise eligible to make under the applicable retirement plan. "(2) SEPARATE ACCOUNTING REQUIRED.—^A program shall not be treated as a qualified Roth contribution program unless the applicable retirement plan— "(A) establishes separate accounts ('designated Roth accounts') for the designated Roth contributions of each employee and any earnings properly allocable to the contributions, and "(B) maintains separate recordkeeping with respect to each account. " (c) DEFINITIONS AND RULES RELATING TO DESIGNATED ROTH CONTRIBUTIONS. —For purposes of this section— "(1) DESIGNATED ROTH CONTRIBUTION.—The term 'designated Roth contribution' means any elective deferral which— "(A) is excludable from gross income of an employee without regard to this section, and "(B) the employee designates (at such time and in such manner as the Secretary may prescribe) as not being so excludable. "(2) DESIGNATION LIMITS.— The amount of elective deferrals which an employee may designate under paragraph (1) shall not exceed the excess (if any) of— "(A) the maximum amount of elective deferrals excludable from gross income of the employee for the taxable year (without regard to this section), over "(B) the aggregate amount of elective deferrals of the employee for the taxable year which the employee does not designate under paragraph (1). "(3) ROLLOVER CONTRIBUTIONS. — "(A) IN GENERAL.—^A rollover contribution of any pay- ment or distribution from a designated Roth account which is otherwise allowable under this chapter may be made only if the contribution is to— "(i) another designated Roth account of the individual from whose account the payment or distribution was made, or "(ii) a Roth IRA of such individual. "(B) COORDINATION WITH LIMIT.— Any rollover contribution to a designated Roth account under subparagraph (A) shall not be taken into account for purposes of paragraph (1). "(d) DISTRIBUTION RULES. —For purposes of this title— "(1) EXCLUSION. —Any qualified distribution from a designated Roth account shall not be includible in gross income. "(2) QUALIFIED DISTRIBUTION.—For purposes of this subsection— "(A) IN GENERAL.—The term 'qualified distribution' has the meaning given such term by section 408A(d)(2)(A) (without regard to clause (iv) thereof). " (B) DISTRIBUTIONS WITHIN NONEXCLUSION PERIOD.— A payment or distribution from a designated Roth account shall not be treated as a qualified distribution if such payment or distribution is made within the 5-taxable-year period beginning with the earlier of— "(i) the first taxable year for which the individual made a designated Roth contribution to any designated
�
