644
PUBLIC LAW 91-172-DEC. 30, 1969
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sentence of paragraph (2) shall apply to a distribution paid aft December 31, 1969, only to the extent that it does not exceed fh^ sum of— ^ " (A) the benefits accrued by the employee on behalf f whom it is paid during plan years beginning before T a uary 1, 1970, and ^^• "(^B) the portion of the benefits accrued by such emplovep during plan years beginning after December 31, 1969, which the distributee establishes does not consist of the employee's allocable share of employer contributions to the trust by which such distribution is paid. The Secretary or his delegate shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph " (2) EMPLOYEE ANNUITIES.—Section 403(a)(2) (relating to capital gains treatment for certain distributions under a qualified annuity plan) is amended by adding at the end thereof the following new subparagraph:
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a^usc «3'^"
"(C)
76 Stat. 824.
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TREATMENT OF TOTAL DISTRIBUTIONS.— "(1) APPLICATION OF SUBSECTION.— " (A) GENERAL RULE.—This subsection
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shall apply to
amounts— " (i) distributed to a distributee, in the case of an employees' trust described in section 401(a) which is exempt from tax under section 501(a), or "(ii) paid to a payee, in the case of an annuity plan described in section 403(a), if the total distributions or amounts payable to the distributee or payee with respect to an employee (including an individual who is an employee within the meaning of section 401(c)(1)) are paid to the distributee or payee wiliiin one taxable year 01 the distributee or payee, but only to the extent that section 402(a)(2) or 403(a)(2)(A) does not apply to such amounts. "(B)
LIMITATION ON CAPITAL GAINS TREATMENT.—Subpara-
graph (A) shall apply to a payment paid after December 31, 1969, only to the extent it does not exceed the sum of— "(1) the benefits accrued by the employee on behalf of whom it is paid during plan years beginning before January 1, 1970, and "(ii) the portion of the benefits accrued by such employee during plan years beginning after December 31, 1969, which the payee establishes does not consist of the employee's allocable share of employer contributions under the plan under which the annuity contract is purchased. The Secretary or his delegate shall prescribe such regulations as may be necessary to carry out the purposes of this subparagraph." (jj) LIMITATION ON TAX.—Section 72(n) (relating to treatment of certain distributions with respect to contributions by self-employed individuals) is amended— (1) by striking out so much thereof as precedes paragraph (2) and inserting m lieu thereof the following: " (n)
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[33 g^
DISTRIBUTIONS TO WHICH APPLICABLE.—This subsec-
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tion shall apply only to distributions or amounts paid— V.:^ 0 ! " (i) on account of the employee's death, " (ii) with respect to an individual who is an ©^^P'PP f^^n without regard to section 401(c)(1), on account 01 o» separation from the service,
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