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" (i) the annuity starting date did not occur before the effective date of this paragraph, and "(ii) the participant was an active participant in the plan on or after such effective date." (2) CERTAIN ADDITIONAL REQUIREMENTS APPLY ONLY TO PLANS TO WHICH V E S T I N G REQUIREMENTS APPLY. S e c t i o U 4 0 1 (a) ( r e l a t i n g

26 USC 401.

to requirements for qualification) is amended by adding at the end thereof the following new sentence: "Paragraphs (11), (12), (13), (14), (15), and (19) shall apply only in the case of a plan to which section 411 (relating to minimum vesting standards) ^"^^' P- '*^^applies without regard to subsection (e)(2) of such section." (b) REQUIREMENTS I N CASE or MERGERS AND CONSOLIDATIONS or 26 USC 401 PLANS OR TRANSFERS or PLAN ASSETS.—Effective with respect to plan "°'^'

years beginning after December 31, 1975, section 401(a) is amended by inserting after paragraph (11) the following new paragraph: "(12) A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that in the case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan after the date of the enactment of the Employee Retirement Income Security Act of 1974, each participant in the plan would (if the plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if the plan had then terminated). This paragraph shall apply in the case of a multiemployer plan only to the extent determined by the Pension Benefit Guaranty Corporation."

^"te, p. 935.

^"'e, p. 829.

(c) RETIREMENT BENEFITS MAY NOT B E ASSIGNED OR ALIENATED.—

Section 401(a) is amended by inserting after paragraph (12) the fol- ^^pralowing new paragraph: "(13) A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that benefits provided under the plan may not be assigned or alienated. For purposes of the preceding sentence, there shall not be taken into account any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment made by any participant who is receiving benefits under the plan unless the assignment or alienation is made for purposes of defraying plan administration costs. For purposes of this paragraph a loan made to a participant or beneficiary shall not be treated as an assignment or alienation if such loan is secured by the participant's accrued nonforfeitable benefit and is exempt from the tax imposed by section 4975 (relat- P"®'' P- 97I. ing to tax on prohibited transactions) by reason of section 4975 (d)(1). This paragraph shall take effect on January 1, 1976 and shall not apply to assignments which were irrevocable on the date of the enactment of the Employee Retirement Income Security Act of 1974." (d) REQUIREMENT T H A T PAYMENT OF BENEFITS BEGIN NOT LATER T H A N W H E N THE PARTICIPANT ATTAINS AGE 65 OR H A S COMPLETED 10 YEARS OF PARTICIPATION.—Section 401(a) is amended by inserting

after paragraph (13) the following new paragraph: Supra. "(14) A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that, unless the participant otherwise elects, the payment of benefits under the plan to the participant will begin not later than the 60th day after the latest of the close of the plan year in which—

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PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

" (A) the date on which the participant attains the earlier of age 65 or the normal retirement age specified under the plan, " (B) occurs the 10th anniversary of the year in which the participant commenced participation in the plan, or " (C) the participant terminates his service with the employer. In the case of a plan which provides for the payment of an early retirement benefit, a trust forming a part of such plan shall not constitute a qualified trust under this section unless a participant who satisfied the service requirements for such early retirement benefit, but separated from the service (with any nonforfeitable right to an accrued benefit) before satisfying the age requirement for such earlj^ retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially, reduced under regulations prescribed by the Secretary or his delegate." (e) REQUIREMENT T H A T P L A N BENEFITS A R E NOT DECREASED BY CERTAIN SOCIAL SECURITY INCREASES.—Section 401(a) is amended by

Ante, p. 937.

42 USC 401.

inserting after paragraph (14) the following new paragraph: "(15) a trust shall not constitute a qualified trust under this section unless under the plan of which such trust is a part— " (A) in the case of a participant or beneficiary who is receiving benefits under such plan, or " (B) in the case of a participant who is separated from the service and who has nonforfeitable rights to benefits, such benefits are not decreased by reason of any increase in the benefit levels payable under title II of the Social Security Act or any increase in the wage base under such title II, if such increase takes place after the date of the enactment of the Employee Retirement Income Security Act of 1974 or (if later) the earlier of the date of first receipt of such benefits or the date of such separation, as the case may be." (f) REQUIREMENT OF NONFORFEITABILITY I N CASE OF CERTAIN

' ^osf, p. 953.

Ante, p. 901.

WITHDRAWALS.—Section 401(a) is amended by inserting after paragraph (18) the following new paragraph: "(19) A trust shall not constitute a qualified trust under this section if under the plan of which such trust is a part any part of a participant's accrued benefit derived from employer contributions (whether or not otherwise nonforfeitable), is forfeitable solely because of withdrawal by such participant of any amount attributable to the benefit derived from contributions made by such participant. The preceding sentence shall not apply to the accrued benefit of any participant unless, at the time of such withdrawal, such participant has a nonforfeitable right to at least 50 percent of such accrued benefit (as determined under section 411). The first sentence of this paragraph shall not apply to the extent that an accrued benefit is permitted to be forfeited in accordance y^\t\i section 411(a)(3)(D) (iii) (relating to proportional forfeitures of benefits accrued before enactment of the Employee Retirement Income Security Act of 1974, in the event of withdrawal of certain mandatory contributions)." SEC. 1022. MISCELLANEOUS PROVISIONS. (a) REQUIREMENT T H A T PLAN NOT B E DISCRIMINATORY.—Section

26 USC 401.

401(a)(4) (disqualifying discriminatory plans) is amended to read as follows:

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 88 Part 1.djvu/983

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PUBLIC LAW 93-406-SEPT. 2, 1974

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"(4) If the contributions or the benefits provided under the plan do not discriminate in favor of employees who are— (A) officers, " (B) shareholders, or " (C) highly compensated. For purposes of this paragraph, there shall be excluded from consideration employees described in section 410(b)(2)(A) and ^"'^' P- 898. (C)." (b) AMENDMENTS RELATING TO SELF-EMPLOTED INDIVBDUALS AND OWNER-EMPLOYEES.— (1) AMENDMENT OF SECTION ( 4 0 I)(a) (lo).—So much of sub-

paragraph (A) of section 401(a) (10) as precedes clause (i) thereof is amended to read as follows: " (A) paragraph (3), the first and second sentences of paragraph (5), and section 410 shall not apply, but—". (2) AMENDMENT o r SECTION ( 4 O I)(d)(3).—Section 401(d)(3) (relating to additional requirements for qualification of trusts and and plans benefiting owner-employees) is amended to read as follows: "(3)(A) The plan benefits each employee having 3 or more years of service (within the meaning of section 410(a)(3)). " (B) For purposes of subparagraph (A), the term 'employee' does not include— " (i) any employee included in a unit of employees covered by a collective-bargaining agreement described in section 410(b)(2)(A), and "(ii) any employee who is a nonresident alien individual described in section 410(b)(2)(C). "

26 USC 40i.

(c) PERSONS OTHER T H A N BANKS M A T B E TRUSTEES OF TRUSTS BENEFITTING OWNER-EMPLOYEES.—

(1) The first sentence of section 401(d)(1) is amended to read as follows: " I n the case of a trust which is created on or after October 10, 1962, or which was created before such date but is not exempt from tax under section 501(a) as an organization 26 USC soi. described in subsection (a) on the day before such date, the assets thereof are held by a bank or other person who demonstrates to the satisfaction of the Secretary or his delegate that the manner in which he will administer the trust will be consistent with the requirements of this section. A trust shall not be disqualified under this paragraph merely because a person (including the employer) other than the trustee or custodian so administering the trust may be granted, under the trust instrument, the power to control the investment of the trust funds either by directing investments (including reinvestments, disposals, and exchanges) or by disapproving proposed investments (including reinvestments, disposals, or exchanges)." (2) The second sentence of section 401(d)(1) is amended by striking out "the date of the enactment of this subsection" and inserting in lieu thereof "October 10, 1962,". (d) CERTAIN CUSTODIAL ACCOUNTS.—Effective as of January 1, ^^^^ ^-^'^ '^^^ 1974, subsection (f) of section 401 (relating to certain custodial note. accounts) is amended to read as follows: " (f) CERTAIN CUSTODIAL ACCOUNTS AND A N N U I T Y CONTRACTS.—For

purposes of this title, a custodial account or an annuity contract shall be treated as a qualified trust under this section if—

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text:
Page:United States Statutes at Large Volume 88 Part 1.djvu/984

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PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

"(1) the custodial account or annuity contract would, except for the fact that it is not a trust, constitute a qualified trust under this section, and "(2) in the case of a custodial account the assets thereof are held by a bank (as defined in subsection (d)(1)) or another person who demonstrates, to the satisfaction of the Secretary or his delegate, that the manner in which he will hold the assets will be consistent with the requirements of this section. For purposes of this title, in the case of a custodial account or annuity contract treated as a qualified trust under this section by reason of this subsection, the person holding the assets of such account or holding such contract shall be treated as the trustee thereof." 26 USC 403 and note.

26 USC 501.

(e)

CUSTODIAL ACCOUNTS FOR REGULATED INVESTMENT COMPANY

STOCK.—Effective as of January 1, 1974, section 403(b) (relating to taxability of beneficiary under annuity purchased by section 501(c) (3^ organization or public school) is amended by adding at the end thereof the following new paragraph: " (7) CUSTODIAL ACCOUNTS FOR REGULATED INVESTMENT COMP A N Y STOCK.— " (A) AMOUNTS PAID TREATED AS CONTRIBUTIONS.—For pur-

poses of this title, amounts paid by an employer described in paragraph (1)(A) to a custodial account which satisfies ^^iQ requirements of section 401(f)(2) shall be treated as amounts contributed by him for an annuity contract for his employee if the amounts are paid to provide a retirement benefit for that employee and are to be invested in regulated investment company stock to be held in that custodial account. " (B) ACCOUNT TREATED AS PLAN.—For purposes of this title, a custodial account which satisfies the requirements of section 401(f)(2) shall be treated as an organization described in section 401(a) solely for purposes of subchapter F and subtitle F with respect to amounts received by it (and income from investment thereof). " (C) REGULATED INVESTMENT COMPANY.—For purposes of this paragraph, the term 'regulated investment company' means a domestic corporation which is a regulated investment company within the meaning of section 851(a), and which issues only redeemable stock."

Ante, p. 939.

26 USC 851. 26 USC 401 an d note.

12 USC 1752.

26 USC 6104.

(f)

INSURED CREDIT UNIONS.—Effective as of January 1, 1974, the

last sentence of section 401(d)(1) is amended by striking out "section 581," and inserting in lieu thereof "section 581, an insured credit union (within the meaning of section 101(6) of the Federal Credit Union Act),". (g) PUBLIC INSPECTION OF CERTAIN INFORMATION W I T H RESPECT TO PENSION, PROFIT-SHARING, AND STOCK BONUS PLANS.— (1) AMENDMENT or SECTION 6104(a).—Paragraph (1) of sec-

tion 6104(a) (relating to public inspection of applications for tax exemption) is amended— (A) by redesignating subparagraph (B) as subparagraph (D) and by inserting after subparagraph (A) the following new subparagraphs; " (B) PENSION, ETC., PLANS.—The following shall be open to public inspection at such times and in such places as the Secretary or his delegate may prescribe: "(1) any application filed with respect to the qualifica' tion of a pension, profit-sharing, or stock bonus plan

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PUBLIC LAW 93-406-SEPT. 2, 1974

941

under section 401(a), 403(a), or 405(a), an individual J^^ j s c 4oi, retirement account described in section 408(a), or an 26 USC 408, individual retirement annuity described in section 408 "(ii) any application filed with respect to the exemption from tax under section 501(a) of an organization forming part of a plan or account referred to in clause (i), "(iii) any papers submitted in support of an application referred to in clause (i) or (ii), and "(iv) any letter or other document issued by the Internal Revenue Service and dealing with the qualification referred to in clause (i) or the exemption from tax referred to in clause (ii). Except in the case of a plan participant, this subparagraph shall not apply to any plan referred to in clause (i) having not more than 25 participants. "(C)

CERTAIN NAMES AND COMPENSATION NOT TO BE OPENED

TO PUBLIC INSPECTION.—In the case of any application, document, or other papers, referred to in subparagraph (B), information from which the compensation (including deferred compensation) of any individual may be ascertained shall not be open to public inspection under subparagraph (B). " (B) The heading of subparagraph (A) of section 6104(a) (1) is amended to read as follows: "(A)

26 USC soi.

26 USC 6i04.

ORGANIZATIONS DESCRIBED IN SECTION 5 0 I. — ".

(C) The heading of subparagraph (D) of section 6104(a) (1) as redesignated by subparagraph (A) of this paragraph is amended to read as follows: "(D)

WITHHOLDING or CERTAIN OTHER INFORMATION.—".

(D) Subparagraph (D) of section 6104(a)(1) (as so redesignated) is amended by striking out "subparagraph (A) " each place it appears and inserting in lieu thereof "subparagraph (A) or (B) ". (2) AMENDMENT OF SECTION 6104(a)(2).—Subparagraph (A) of section 6104(a)(2) is amended by adding at the end thereof "any application referred to in subparagraph (B) of subsection (a)(1) of this section, and". (3) AMENDMENT OF SECTION 6104(b).—Section 6104(b) (relating to inspection of annual information returns) is amended by striking out "and 6056" and inserting in lieu thereof "6956, and 6058". (4) EFFECTIVE DATE.—The amendments made by this subsection 26 USC 6104 shall apph to applications filed (or documents issued) after the "°*^' date of er c^ctment of this Act. (h) PUBLICITY OF RETURNS.—Effective on the date of the enactment ^^^^^^^ ^^°^ of this Act, section 6103 (relating to publicity of returns and disclosure of information as to persons filing income tax returns) is amended by adding at the end thereof a new subsection (g) to read as follows: "(g) DISCLOSURE OF INFORMATION W I T H RESPECT TO DEFERRED COMPENSATION PLANS.—The Secretary or his delegate is authorized

to furnish— "(1) returns with respect to any tax imposed by this title or information with respect to such returns to the proper officers and employees of the Department of Labor and the Pension Benefit

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Page:United States Statutes at Large Volume 88 Part 1.djvu/986

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PUBLIC LAW 93-406-SEPT. 2, 1974

te, p. 832. Post, p 1003.

An

26

use 6057.

Post, p. 947,

26

use 501 and

note 26

use 501.

26

use 401,

[88 STAT.

Guaranty Corporation for purjjoses of administration of Titles I and IV of the Employee Retirement Income Security Act of 1974, and "(2) registration statements (as described in section 6057) and information with respect to such statements to the proper officers and employees of the Department of Health, Education, and Welfare for purposes of administration of section 1131 of the Social Security Act." (i) CERTAIN PUERTO RICAN PENSION, E T C., PLANS To B E EXEMPT FROM TAX UNDER SECTION 501 (a).— (1) GENERAL RULE.—Effective for taxable years beginning after

December 31, 1973, for purposes of section 501(a) of the Internal Revenue Code of 1954 (relating to exemption from tax), any trust forming part of a pension, profit-sharing, or stock bonus plan all of the participants of which are residents of the Commonwealth of Puerto Rico shall be treated as an organization described in section 401(a) of such Code if such trust— (A) forms part of a pension, profit-sharing, or stock bonus plan, and (B) is exempt from income tax under the laws of the Commonwealth of Puerto Rico. (2) ELECTION TO HAVE PROVISIONS OF, AND AMENDMENTS MADE BY, TITLE II OF T H I S ACT APPLY.

26 USC 7701. 26 USC 404

(A) If the administrator of a pension, profit-sharing, or stock bonus plan which is created or organized in Puerto Rico elects, at such time and in such manner as the Secretary of the Treasury may require, to have the provisions of this paragraph apply, for plan years beginning after the date of election any trust forming a part of such plan shall be treated as a trust created or organized in the United States for purposes of section 401(a) of the Internal Revenue Code of 1954. (B) An election under subparagraph (A), once made, is irrevocable. (C) This paragraph applies to plan years beginning after the date of enactment of this Act. (D) The source of any distributions made under a plan which makes an election under this paragraph to participants and beneficiaries residing outside of the United States shall be determined, for purposes of subchapter N of chapter 1 of the Internal Revenue Code of 1954, by the Secretary of the Treasury in accordance with regulations prescribed by him. For purposes of this subparagraph the United States means the United States as defined in section 7701(a)(9) of the Internal Revenue Code of 1954. Q'^ Y E A R O F DEDUCTION FOR CERTAIN E M P L O Y E R CONTRIBUTIONS FOR SEVERANCE PAYMENTS REQUIRED BY FOREIGN LAW.—Effective

for taxable years beginning after December 31, 1973, if— (1) an employer is engaged in a trade or business in a foreign country, (2) such employer is required by the laws of that country to make payments, based on periods of service, to its employees or their beneficiaries after the employees' retirement, death, or other separation from the service, and (3) such employer establishes a trust (whether organized

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Page:United States Statutes at Large Volume 88 Part 1.djvu/987

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943

within or outside the United States) for the purpose of fundingthe payments required by such law, then, in determining for purposes of paragraph (5) of section 404(a) of the Internal Revenue Code of 1954 the taxable year in which any contribution to or under the plan is includible in the gross income of the nonresident alien employees of such employer, such paragraph (5) shall be treated as not requiring that separate accounts be maintained for such nonresident alien employees. (k) RECEIPTS FOR EMPLOYEES.—Section 6051 (relating to receipts for employees) is amended by inserting after "exemption," in subsection (a) the following: "or every employer engaged in a trade or business who pays remuneration for services performed by an employee, including the cash value of such remuneration paid in any medium other than cash,". SEC. 1023. RETROACTIVE CHANGES IN PLAN. Section 401(b) (relating to certain retroactive changes in plan) is amended to read as follows: " (b) CERTAIN RETROACTIVE CHANGES I N P L A N. — A stock bonus, pension, profit-sharing, or annuity plan shall be considered as satisfying the requirements of subsection (a) for the period beginning with the date on which it was put into effect, or for the period beginning with the earlier of the date on which there was adopted or put into effect any amendment which caused the plan to fail to satisfy such requirements, and ending with the time prescribed by law for filing the return of the employer for his taxable year in which such plan or amendment was adopted (including extensions thereof) or such later time as the Secretary or his delegate may designate, if all provisions of the plan which are necessary to satisfy such requirements are in effect by the end of such period and have been made effective for all purposes for the whole of such period." SEC. 1024. EFFECTIVE DATES.

26 USC 404.

26 USC 6051.

^^ ^^^ '*°^-

26 USC 401

Except as otherwise provided in section 1021, the amendments made "°'^' by section 1021 shall apply to plan years to which part I applies. Except as otherwise provided in section 1022, the amendments made by section 1022 shall apply to plan years to which part I applies. Section 1023 shall take effect on the date of the enactment of this Act. PART 3—REGISTRATION AND INFORMATION SEC. 1031. REGISTRATION AND INFORMATION. (a)

ANNUAL

REGISTRATION

AND INFORMATION

RETURNS.—Part

III of subchapter A of chapter 61 (relating to information returns) is amended by adding at the end thereof the following new subpart: "SUBPART E—REGISTRATION OF AND INFORMATION CONCERNING PENSION, ETC., PLANS "Sec. 6057. Annual registration, etc. "Sec. 6058. Information required in connection with certain plans of deferred compensation. "Sec. 6059. Periodic report by actuary. " SEC. 6057. ANNUAL REGISTRATION, ETC. "(a)

26 USC 6057.

A N N U A L REGISTRATION.—

"(1) GENERAL RULE.—Within such period after the end of a plan year as the Secretary or his delegate may by regulations prescribe, the plan administrator (within the meaning of section 414(g)) of each plan to which the vesting standards of section 203 "^"^e, p. 925. of part 2 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 applies for such plan year shall file ^"'^' P- ^54. a registration statement with the Secretary or his delegate.

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text:
Page:Folk-lore - A Quarterly Review. Volume 10, 1899.djvu/144

 118 hearth, and the fox had to go out and cllmb up on the roof, and drop the contents of his bag down the chimney. And so he did; and the big stone fell down and knocked the family glass pot into bits. And when the mother saw this, she was so angry that she took off her wooden shoe, and ran out of the house, and knocked him off the roof with it.

.

Hampden Club,

Phoenix Street, N.W.

Method of Starting a New House in the Olden Times.

Perhaps the following, told me by a man at Kiltubbrid, co. Leitrim, may interest the society:

The ground for the house having been measured out, a sod would be turned at the four corners. The four sods would be left for two or three nights, to see if the proposed house were on a fairy "walk," in which case they would surely be found replaced, and another site would have to be found. If nothing occurred, a hen or some such small animal would be killed, and the blood allowed to drip in the four holes, after which the house might be proceeded with.

A new house is such a rarity in the neighbourhood now that I can get no testimony as to recent procedure.


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Page:United States Statutes at Large Volume 88 Part 1.djvu/988

 944

Ante,

PUBLIC LAW 93-406-SEPT. 2, 1974

p. 9 2 5.

[88 STAT.

"(2) CONTENTS.—The registration statement required by paragraph (1) shall set forth— " (A) the name of the plan, " (B) the name and address of the plan administrator, " (C) the name and taxpayer identifying number of each participant in the plan— " (i) who, during such plan year, separated from the service covered by the plan, "(ii) who is entitled to a deferred vested benefit under the plan as of the end of such plan year, and "(iii) with respect to whom retirement benefits were not paid under the plan during such plan year, " (D) the nature, amount, and form of the deferred vested benefit to which such participant is entitled, and " (E) such other information as the Secretary or his delegate may require. At the time he files the registration statement under this subsection, the plan administrator shall furnish evidence satisfactory to the Secretary or his delegate that he has complied with the requirement contained in subsection (e). " (b) NOTIFICATION or CHANGE I N STATUS.—Any plan administrator required to register under subsection (a) shall also notify the Secretary or his delegate, at such time as may be prescribed by regulations, of— " (1) any change in the name of the plan, "(2) any change in the name or address of the plan administrator, " (3) the termination of the plan, or "(4) the merger or consolidation of the plan with any other plan or its division into two or more plans. "(c) VOLUNTARY REPORTS.—To the extent provided in regulations prescribed by the Secretary or his delegate, the Secretary or his delegate may receive from— " (1) any plan to which subsection (a) applies, and "(2) any other plan (including any governmental plan or church plan (within the meaning of section 414)), such information (including information relating to plan years beginning before January 1, 1974) as the plan administrator may wish to file with respect to the deferred vested benefit rights of any participant separated from the service covered by the plan during any plan year. " (d) TRANSMISSION OF INFORMATION TO SECRETARY OF HEALTH, EDUCATION, AND WELFARE.—The Secretary or his delegate shall trans-

mit copies of any statements, notifications, reports, or other information obtained by him under this section to the Secretary of Health, Education, and Welfare. "(e) INDIVIDUAL STATEMENT TO PARTICIPANT.—Each plan administrator required to file a registration statement under subsection (a) shall, before the expiration of the time prescribed for the filing of such registration statement, also furnish to each participant described in subsection (a)(2)(C) an individual statement setting forth the information with respect to such participant required to be contained in such registration statement. "(f)

REGULATIONS.—

"(1) IN GENERAL.—The Secretary, after consultation with the Secretary of Health, Education, and Welfare, may prescribe such regulations as may be necessary to carry out the provisions of this section. " (2) PLANS TO WHICH MORE THAN ONE EMPLOYER CONTRIBUTES.—

This section shall apply to any plan to which more than one

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Page:United States Statutes at Large Volume 88 Part 1.djvu/989

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PUBLIC LAW 9 3 - 4 0 6 - S E P T. 2, 1974

945

e m p l o y e r is r e q u i r e d to c o n t r i b u t e only to the extent provided i n r e g u l a t i o n s prescribed under t h i s subsection. "(g)

CROSS R E F E R E N C E S. —

"For provisions relating to penalties for failure to register or furnish statements required by this section, see section 6652(e) and section 6690. "For coordination between Department of the Treasury and the Department of Labor with regard to administration of this section, see section 3004 of the Employee Retirement Income Security Act of 1974. "SEC. 6058. INFORMATION REQUIRED IN CONNECTION WITH CERTAIN PLANS OF DEFERRED COMPENSATION. " (a) IN GENERAL. — E v e r y employer w h o m a i n t a i n s a pension, a n n u i t y, stock bonus, profit-sharing, or other funded p l a n of deferred comp e n s a t i o n described in part I of subchapter D of chapter 1, or the p l a n a d m i n i s t r a to r ( w i t h i n the m e a n i n g of section 4 1 4 (g)) of the p l a n, shall file a n annual r e t u r n s t a t i n g such information as the Secretary o r h i s delegate may by r e g u l a t i o n s prescribe w i t h respect to the qualification, financial condition, and operations of the p l a n; except that, i n the discretion of the Secretary or h i s delegate, the employer may b e relieved from s t a t i n g in its r e t u r n any information which is report e d in other r e t u r n s. "(b)

26 USC 401.

^"f©' P- 925.

ACT U A R I A L STATEMENT I N C A S E OF MERGERS^ E T C. — Not less

than 30 d a y s before a m e r g e r, consolidation, or transfer of assets or liabilities of a p l a n described in subsection (a) to a n other p l a n, the p l a n a d m i n i s t r a to r ( w i t h i n the m e a n i n g of section 4 1 4 (g)) shall file an a c t u a r i a l statement of v a l u a t i o n evidencing compliance w i t h the requirements of section 401(a) ( 1 2). " (c) E M P L O Y E R. — For purposes of t h i s section, the term 'employer' includes a person described in section 401(c)(4) and an i n d i v i d u a l who establishes an i n d i v i d u a l retirement account or a n n u i t y described in section 408. "(d)

26 USC 6058.

^"'e, p. 937. ^^ "^^ '*°^26 USC 408.

CROSS E E F E R E N C E S. —

"For provisions relating to penalties for failure to file a return required by this section, see section 6652(f). "For coordination between the Department of the Treasury and the Department of Labor with respect to the information required under this section, see section 3004 of title III of the Employee Retirement Income Security Act of 1974.". (b)

SANCTIONS.— (1) F A I L U R E TO F I L E REGISTRATION STATEMENTS OR NOTIFICATION OF CHANGE I N S T A T U S. —

(A) Section 6652 ( r e l a t i n g to failure to file certain inform a t i o n r e t u r n s) is amended by r e designating subsection (e) as subsection (g) and by inserting after subsection (d) the following new subsections:

26 USC 6652.

" (e) A N N U A L R E G I S T R A T I O N AND OTHER NOTIFICATION BY P E N SION P L A N. —

" (1) R E G I S T R A T I O N. — I n the case of any failure to file a regist r a t i o n statement required under section 6057(a) ( r e l a t i n g to annual r e g i s t r a t i o n of certain p l a n s) which includes all part i c i p a n t s required to be included in such statement, on the date p r e scribed the r e for ( determined w i t h o u t r e g a r d to any extension of t i m e for filing), unless it is shown that such failure is due to reasonable cause, the r e shall be p a i d (on notice and d e m and by the Secretary or his delegate and i n the same m a n n e r as tax) by the person f a i l i n g so to file, an a m o u n t equal to $1 for each part i c i p a n t w i t h respect to w h o m the r e is a failure to file, m u l t i p l i e d by the n u m b e r of d a y s during which such failure continues, b u t the to t a l a m o u n t imposed under t h i s paragraph on any person for any f a i l u r e to file w i t h respect to any p l a n year shall not exceed $5,000.

^"'^' P- ^43.

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 946

Ante,

PUBLIC LAW 93-406-SEPT. 2, 1974

p. 943.

[88 STAT.

"(2) NOTIFICATION OF CHANGE OF STATUS.—In the case of failure to file a notification required under section 6057(b) (relating to notification of change of status) on the date prescribed therefor (determined without regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary or his delegate and in the same manner as tax) by the person failing so to file, $1 for each day during which such failure continues, but the total amounts imposed under this paragraph on any person for failure to file any notification shall not exceed $1,000. " (f) INFORMATION REQUIRED IN CONNECTION W I T H CERTAIN PLANS OF DEFERRED COMPENSATION.—In the case of failure to file a return or

Ante, p. 945. P°^*'P- 970

26 USC 6652.

statement rcqulred under section 6058 (relating to information required in connection with certain plans of deferred compensation) Qj, ^047 (relating to information relating to certain trusts and annuity and bond purchase plans) on the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid (on notice and demand by the Secretary or his delegate and in the same manner as tax) by the person failing so to file, $10 for each day during which such failure continues, but the total amount imposed under this subsection on any person for failure to file any return shall not exceed $5,000." ^g^ ^j) "j^j^g section heading for section 6652 is amended by adding ", Registration Statements, etc." before the period at the end thereof. (ii) The item relating to section 6652 in the table of contents for subchapter A of chapter 68 is amended by adding ", registration statements, etc." before the period of the end thereof. (2) FAILURE TO FURNISH STATEMENT TO PARTICIPANT.—

26 USC 6690.

26 USC 3111.

(A) Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section: «gEC. 6690. FRAUDULENT STATEMENT OR FAILURE TO FURNISH STATEMENT TO PLAN PARTICIPANT. "Any person required under section 6057(e) to furnish a statement to a participant who willfully furnishes a false or fraudulent statement, or who willfully fails to furnish a statement in the manner, at the time, and showing the information required under section 6057(e), or regulations prescribed thereunder, shall for each such act, or for each such failure, be subject to a penalty under this subchapter of $50, which shall be assessed and collected in the same manner as the tax on employers imposed by Section 3111." (B) The table of sections for such subchapter B is amended by adding at the end thereof the following new item: "Sec. 6690.

Fraudulent statement or failure to furnish statement to plan participant." (c) CLERICAL AMENDMENTS. —

(1) The table of subparts for such part III is amended by adding at the end thereof the following: "Subpart B. Registration of and information concerning pension, etc., plans."

26 USC 6033.

(2) Section 6033(c) (relating to cross references) is amended by adding at the end thereof the following: "For provisions relating to information required in connection with certain plans of deferred compensation, see section 6058."

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 88 STAT.]

(3) Subsection (d) of section 6047 (relating to information with respect to certain trusts and annuity and bond purchase plans) is amended to read as follows: "(d)

947

PUBLIC LAW 93-406-SEPT. 2, 1974

26 USC 6047.

CROSS REFERENCES.—

"(1) For provisions relating to penalties for failure to file a return required by this section, see section 6652(f). "(2) For criminal penalty for furnishing fraudulent information, see section 7207." SEC. 1032. DUTIES OF SECRETARY OF HEALTH, EDUCATION, AND WELFARE. Title X I of the Social Security Act (relating to general provisions) is amended by adding at the end of part A thereof the following new section: NOTIFICATION OF SOCIAL SECURITY C L A I M A N T W I T H RESPECT TO DEFERRED VESTED B E N E F I T S

"SEC. 1131. (a) Whenever— "(1) the Secretary makes a finding of fact and a decision as to— " (A) the entitlement of any individual to monthly benefits under section 202,223, or 228, " (B) the entitlement of any individual to a lump-sum death payment payable under section 202(i) on account of the death of any person to whom such individual is related by blood, marriage, or adoption, or " (C) the entitlement under section 226 of any individual to hospital insurance benefits under part A of title X VIII, or " (2) the Secretary is requested to do so— " (A) by any individual with respect to whom the Secretary holds information obtained under rection 6057 of the Internal Revenue Code of 1954. or " (B) in the case of the death of the individual referred to in subparagraph (A), by the individual who would be entitled to payment under section 204 (cl) of this Act. he shall transmit to the individual referred to in paragraph (1) or the individual making the request under paragraph (2) any information, as reported by the employer-, regarding any deferred vested benefit transmitted to the Secretary i^ursuant to such section 6057 with respect to the individual leforred to in paragraph (1) or (2)(A) or the person on whose wages and self-employment income entitlement (or claim of entitlement) is based. " (b)(1) For purposes of section 201(g)(1), expenses incurred in the administration of subsection (a) shall be deemed to be expenses incurred for the administration of title II. "(2) There are hereby authorized to be appropriated to the Federal Old-Age and Survivors Insurance Trust Fund for each fiscal year (commencing with the fiscal year ending June 30, 1974) such sums as the Secretary deems necessary on account of additional administrative expenses resulting from the enactment of the provisions of subsection (a). " SEC. 1033. REPORTS BY ACTUARIES. (a) REPORTS BY ACTUARIES.—Subpart E of part III of subchapter A of chapter 61 (relating to registration of and information concerning pension, etc., plans) as added by section 1031(a) of this Act, is amended by adding at the end thereof the following new section: "SEC. 6059. PERIODIC REPORT OF ACTUARY. " (a) GENERAL RULE.—The actuarial report described in subsection (b) shall be filed by the plan administrator (as defined in section

42 USC 1320b-1..

42 USC 402, 423, 428.

42 USC 426. 42 USC 1395c.

Ante,

p. 943.

42 USC 404.

42 USC 401.

Appropriation.

Ante,

p. 943.

26 USC 6059.

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 948

PUBLIC LAW 9 3 - 4 0 6 - S E P T. 2, 1974

^^i4nfe, pp. 925,

26 USC 7701.

[88 STAT.

4 1 4 (g) of each defined benefit p l a n to which section 412 applies, for the first p l a n year for which section 412 applies to the p l a n and for each t h i r d p l a n year the r e after ( o r more frequently if the Secretary or his delegate determines that more frequent report s a r e n e c e s s a r y). " (b) ACTUARIAL R E P O R T. — The a c t u a r i a l report of a p l a n required by subsection (a) shall be p r e p a r e d and signed by a n enrolled a c t u a r y ( w i t h i n the m e a n i n g of section 7701(a) ( 3 5)) and shall c o n t a i n — " (1) a description of the f u n d i n g m e t h o d and a c t u a r i a l a s s u m p t i o n s used to determine costs under the p l a n, " (2) a certification of the c o n t r i b u t i o n necessary to reduce the a c c u m u l a t e d f u n d i n g deficiency ( a s defined in section 4 1 2 (a)) to zero, " (3) a statement— " (A) that to the best of his knowledge the report is complete and accurate, and " (B) the requirements of section 412(c) ( r e l a t i n g to reasonable a c t u a r i a l a s s u m p t i o n s) have been complied with, " (4) such other information a s may b e necessary to fully and fairly disclose the a c t u a r i a l position of the p l a n, and " (5) such other information r e g a r d i n g the p l a n as the Secretary or h i s delegate may by regulations require. "(c)

TIME

AND M A N N E R

OF F I L I N G. — The

actuarial

report

and

statement required by t h i s section shall be filed a t the time and in the m a n n e r provided by r e g u l a t i o n s prescribed by the Secretary o r h i s delegate. "(d)

CROSS R E F E R E N C E. —

"For coordination between the Department of the Treasury and the Department of Labor with respect to the report required to be filed under this section, see section 3004 of title III of the Employee Retirement Income Security Act of 1974.". Ante,

p 946.

26 USC 6692. Ante, p 925. Ante, p 914. Ante, p. 947.

26 USC 6059 note.

Ante,

p. 8 4 1.

(b)

ASSESSABLE P E N A L T I E S. — Subchapter B of chapter 68 ( r e l a t i n g

to assessable penalties) is amended by a d d i n g a t the e n d thereof the following n e w section: "SEC. 6692. FAILURE TO FILE ACTUARIAL REPORT. " The p l a n a d m i n i s t r a to r ( a s defined i n section 4 1 4 (g)) of each defined benefit p l a n to which section 412 applies w h o fails to file the report required by section 6059 a t the t i m e and in the m a n n e r required by section 6059, shall p a y a p e n a l t y of $1,000 for each such failure unless i t is shown that such failure is due to reasonable cause." (c)

CONSOLIDATION o r ACT U A R I A L R E P O R T S. — The Secretary of the

Treasury and the Secretary of Labor shall t a k e such steps a s may be necessary to assure coordination to the maximum extent feasible between the a c t u a r i a l report s required by section 6059 of the I n t e r n a l Revenue Code of 1954 and by section 1 0 3 (d) of title I of the E m p l o y e e Retirement I n c o m e S e c u r i t y Act of 1974. (d)

CLERICAL AMENDMENT. — The t a b l e of sections for

subchapter

B of chapter 68 is amended by a d d i n g a t the e n d thereof the following new.item: notf use 605 7

Ante, p. 943.

"Sec. 6692. Failure to file actuarial report.", gEc. 1034. EFFECTIVE DATES. T h i s part shall t a k e effect upon the date of the enactment of t h i s Act; except that — (1) the requirements of section 6059 of the I n t e r n a l Revenue Code of 1954 shall a p p l y only w i t h respect to p l a n year s to which part I of t h i s title applies, (2) the requirements of section 6057 of such Code shall a p p l y only w i t h respect to p l a n year s b e g i n n i n g after December 31, 1975,

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949

(3) the requirements of section 6058(a) of such Code shall apply only with respect to plan years beginning after the date of the enactment of this Act, and (4) the amendments made by section 1032 shall take effect on January 1, 1978.

^"'«' P- ^^S.

PART 4—DECLARATORY JUDGMENTS RELATING TO QUALIFICATION OF CERTAIN RETIREMENT PLANS SEC. 1041. TAX COURT PROCEDURE.

(a) IN GENERAL.—Subchapter C of chapter 76 (relating to the Tax Court, is amended by adding at the end thereof the following new part: "PART IV—DECLARATORY JUDGMENTS RELATING TO QUALIFICATION OF CERTAIN RETIREMENT PLANS "Sec. 7476. Declaratory judgments. "SEC. 7476. DECLARATORY JUDGMENTS. " (a) CREATION OF REMEDY.—In a case of actual controversy involving— "(1) a determination by the Secretary or his delegate with respect to the initial qualification or continuing qualification of a retirement plan under subchapter D of chapter 1, or "(2) a failure by the Secretary or his delegate to make a determination with respect to— " ^ A) such initial qualification, or " (B) such continumg qualification if the controversy arises from a plan amendment or plan termination, upon the filing of an appropriate pleading, the United States Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court and shall be reviewable as such. "(b)

LIMITATIONS.—

"(1) PETITIONER.—A pleading may be filed under this section only by a petitioner who is the employer, the plan administrator, an employee who has qualified under regulations prescribed by the Secretary or his delegate as an interested party for purposes of pursuing administrative remedies within the In|:ernal Revenue Service, or the Pension Benefit Guaranty Corporation. " (2) NOTICE.—For purposes of this section, the filing of a pleading by any petitioner may be held by the Tax Court to be premature, unless the petitioner establishes to the satisfaction of the court that he has complied with the requirements prescribed by regulations of the Secretary or his delegate with respect to notice to other interested parties of the filing of the request for a determination referred to in subsection (a). " (3) EXHAUSTION

OF ADMINISTRATE^

REMEDIES.—The

Tax

Court shall not issue a declaratory judgment or decree under this section in any proceeding unless it determines that the petitioner has exhausted administrative remedies available to him within the Internal Revenue Service. A petitioner shall not be deemed to have exhausted his administrative remedies with respect to a failure by the Secretary or his delegate to make a determination with respect to initial qualification or continuin.qr qualification of a retirement plan before the expiration of 270 days after the request for such determination was made.

38-194 O - 76 - 63 Pt. 1

26 USC 7476. '

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 950

P U B L I C LAW 9 3 - 4 0 6 - S E P T. 2, 1974 "(4)

[88 STAT.

P L A N P U T I N TO E F F E C T. — N o p r o c e e d i n g may be

main-

t a i n e d under t h i s section unless the p l a n ( and, i n the case of a cont r o v e r s y involving the c o n t i n u i n g qualification of the p l a n because of a n amendment to the p l a n, the amendment) w i t h respect to which a decision of the T a x C o u r t is s o u g h t has been p u t into effect before the filing of the p l e a d i n g. A p l a n o r amendment shall not be t r e a t e d a s not b e i n g i n effect merely because under the p l a n the funds c o n t r i b u t e d to the p l a n may be refunded if the p l a n ( o r the p l a n a s so amended) is found to be not qualified. "(5)

26 USC 401. 26 ""'^ 403. "" u s e '"" 26 USC 405.

TIME

FOR BRINGING ACTION. — I f

the

Secretary

or

his

delegate sends by certified o r registered mail notice of h i s determination w i t h respect to the qualification of the p l a n to the persons referred to i n paragraph (1) ( o r, i n the case of employees referred to i n paragraph (1), to any i n d i v i d u a l designated under r e g u l a t i o n s prescrijbed by the Secretary o r h i s delegate as a representative of such e m p l o y e e), n o p r o c e e d i n g may be i n i t i a t e d under t h i s section by any person unless the p l e a d i n g is filed before the ninety-first d a y after the d a y after such notice is mailed to such person ( o r to h i s designated representative, i n the case of a n employee). " (c) COMMISSIONERS. — The chief j u d g e of the T a x C o u r t may assign proceedinofs under t h i s section to be h e a r d by the commissioners of <"^^e court, and the court may a u t h o r i z e a commissioner to m a k e the decision of the court w i t h respect to such proceeding, subject to such conditions and review as the court may by r u l e p r o v i d e. " (d) RETIREMENT P L A N. — For purposes of t h i s section, the term 'retirement plan' means— " (1) a pension, profit-sharing, o r stock bonus p l a n described jj^ section 401(a) o r a t r u s t which is part of such a p l a n, " (2) a n a n n u i t y p l a n described i n section 4 0 3 (a), or " (3) a b o n d purchase p l a n described i n section 4 0 5 (a). "(e)

CROSS R E F E R E N C E. —

"For provisions concerning intervention by Pension Benefit Guaranty Corporation and Secretary of Labor in actions brought under this section and right of Pension Benefit Guaranty Corporation to bring action, spe section 3001(c) of subtitle A of title III of the Employee Retirement Income Security Act of 1974." 26 USC 7451.

(b) T E C H N I C A L AND CONFORMING AMENDMENTS. — (1) F E E FOR F I L I N G P E T I T I O N. — S e c t i o n 7451 ( r e l a t i n g to fee

for filing p e t i t i o n) is amended by striking o u t "deficiency" and inserting i n lieu thereof "deficiency o r for a d e c l a r a to r y j u d g m e n t under part IV of t h i s subchapter ". 26 USC 7459.

(2) D A T E

OF D E C I S I O N. — S e c t i o n 7 4 5 9 (c)

( r e l a t i n g to date of

decision) is amended by inserting before the period a t the e n d of the first sentence the following: " o r, i n the case of a d e c l a r a to r y j u d g m e n t p r o c e e d i n g under part IV of t h i s subchapter, the date of the c o u r t ' s o r d e r enter i n g the decision". (3)

26 USC 7482.

Ante, p. 949.

V E N U E FOR APPEAL OF D E C I S I O N. —

^ ^ ^ Soction 7482(b)(1) ( r e l a t i n g to vcnue) i s amended by striking o u t the period a t the e n d of subparagraph (B) and inserting i n lieu thereof ", o r " and by inserting after subparagraph (B) the following n e w subparagraph: " (C) i n the case of a person seeking a d e c l a r a to r y decision under section 7476, the p r i n c i p a l place of business, o r p r i n cipal office o r agency of the e m p l o y e r. " (B) Section 7482(b)(1) is f u r the r amended — (i) by striking out "neither subparagraph (A) n o r (B) a p p l i e s " and inserting i n lieu thereof " subparagraph (A), (B), and (C) do not a p p l y "; and

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951

(ii) by inserting:; before the period at the end of the last sentence thereof the following: "or as of the time the petition seeking a declaratory decision under section 7476 was filed with the Tax Court". (c) CLERICAL AMENDMENT.—The table of parts for subchapter C of chapter 76 (relating to the Tax Court) is amended by adding at the end thereof the following new item:

^"'^' P- '^49.

"PART IV. Declaratory judgments relating to qualification of certain retirement plans.". 26 (d) EFFECTIVE DATE.—The amendments made by this section shall ^^^^ u s e 7476 apply to pleadings filed more than 1 year after the date of the enactment of this Act.

PART 5—INTERNAL REVENUE SERVICE SEC. 1051. ESTABLISHMENT OF OFFICE.

(a) IN GENERAL.—Section 7802 (relating to Commissioner of Internal Revenue) is amended to read as follows: "SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT COMMISSIONER (EMPLOYEE PLANS AND EXEMPT ORGANIZATIONS). " (a) CoiviiMissioNER OF INTERNAL REVENUE.—There shall be in the Department of the Treasury a Commissioner of Internal Revenue, who shall be appointed by the President, by and with the advice and consent of the Senate, The Commissioner of Internal Revenue shall have such duties and powers as may be prescribed by the Secretary. "(b)

26 USC 7802.

ASSISTANT COMMISSIONER FOR EMPLOYEE PLANS AND EXEMPT

Office of EmORGANrzATiONS.—There is established within the Internal Revenue ployee Plans and Service an office to be known as the 'Office of Employee Plans and Exempt OrganiExempt Organizations' to be under the supervision and direction of an zations. Establishment. Assistant Commissioner of Internal Revenue. As head of the Office, the Assistant Commissioner shall be responsible for carrying out such functions as the Secretary or his delegate may prescribe with respect to organizations exempt from tax under section 501(a) and with respect 26 USC 501. to plans to which part I of subchapter D of chapter 1 applies (and with I'espect to organizations designed to be exempt under such section and plans designed to be plans to which such part applies)." (b)

SALARIES.— (1) ASSISTANT COMMISSIONER.—Section 5109 of title 5, United

States Code, is amended by adding at the end thereof the ing new subsection: "(c) The position held by the employee appointed under 7802(b) of the Internal Revenue Code of 1954 is classified at and is in addition to the number of positions authorized by 5108(a) of this title." (2) CliASSIFICATION OF POSITIONS AT GS-1 6 AND 3 7.

followsection GS-18, section 5 USC 5108. Section

5108 of title 5, United States Code, is amended by adding at the end thereof the following new subsection: "(e) I n addition to the number of positions authorized by subsection (a), the Commissioner of Internal Revenue is authorized, without regard to any other provision of this section, to place a total of 20 positions in the Internal Revenue Service in GS-16 and 17.". (c) CLERICAL AMENDMENTS.—The item relating to section 7802 in the table of sections for subchapter A of chapter 80 is amended to read as follows: "Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioner (Employee Plans and Exempt Organizations)." (d) EFFECTIVE DATE.-—The amendments made by this section shall

take effect on the 90th day after the date of the enactment of this Act.

26 USC 7802 note.

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 952 31 USC 1037.

26 USC 4940.

PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

SEC. 1052. AUTHORIZATION OF APPROPRIATIONS. There is authorized to be appropriated to the Department of the Treasury for the purpose of carrying out all functions of the OiRce of Employee Plans and Exempt "Organizations for each fiscal year beginning after June 30, 1974, an amount equal to the sum of— (1) so much of the collections from the taxes imposed under section 4940 of such Code (relating to excise tax based on investment income) as would have been collected if the rate of tax under such section was 2 percent during the second preceding fiscal year, and (2) the greater of— (A) an amount equal to the amount described in paragraph (1), or (B) $30,000,000.

Subtitle B—Other Amendments to the Internal Revenue Code Relating to Retirement Plans SEC. 2001. CONTRIBUTIONS ON BEHALF OF SELF-EMPLOYED INDIVIDUALS AND SHAREHOLDER-EMPLOYEES. (a) INCREASE I N MAXIMUM EMPLOYED INDIVIDUALS.— 26 USC 404.

FOR

SELF-

INCREASE

IN

MAXIMUM

AMOUNT

DEDUCTIBLE FOR SHARE-

HOLDER-EMPLOYEES.—Paragraph (1) of section 1379(b) (relating to taxability of shareholder-employees) is amended— CI) by striking Out "10 percent" in subparagraph (A) and inserting in lieu thereof "15 percent", and (2) by striking out "$2,500" in subparagraph (B) and inserting in lieu thereof "$7,500". (c)

26 USC 401.

DEDUCTIBLE

(1) Paragraph (1) of section 404(e) (relating to special limitations for self-employed individuals) is amended— (A) by striking out "$2,500, or 10 percent" and inserting in lieu thereof "$7,500, or 15 percent", and (B) by striking out "subject to the provisions of paragraph (2) " and inserting in lieu thereof "subject to paragraphs (2) and (4)". (2) Paragraph (2)(A) of section 404(e) is amended by striking out "shall not exceed $2,500, or 10 percent" and inserting in lieu thereof "shall (subject to paragraph (4)) not exceed $7,500, or 15 percent". (3) Section 404(e) is amended by adding at the end thereof the following new paragraph: "(4) LIMITATIONS CANNOT BE LOWER THAN $750 OR 100 PERCENT OF EARNED INCOME.—The limitations under paragraphs (1) and (2)(A) for any employee shall not be less than the lesser of— " (A) $750,or " (B) 100 percent of the earned income derived by such employee from the trades or businesses taken into account for purposes of paragraph (1) or (2)(A) as the case may be.". (b)

26 USC 1379.

AMOUNT

ONLY FIRST $100,000 of A N N U A L COMPENSATION To B E TAKEN

INTO ACCOUNT.—Subsection (a) of section 401 (relating to requirements for qualification) is amended by inserting after paragraph (16) the following new paragraph: "(17) I n the case of a plan which provides contributions or benefits for employees some or all of whom are employees within the meaning of subsection (c)(1), or are shareholder-employees within the meaning of section 1379(d), only if the annual com pen-

�


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 88 STAT. ]

PUBLIC LAW 93-406-SEPT. 2, 1974

953

sation of each employee taken into account under the plan does not exceed the first $100,000 of such compensation." (d)

DEFINED BENEFIT PLANS FOR SELF-EMPLOYED INDIVIDUALS.—

(1) Subsection (a) of section 401 is amended by inserting after paragraph (IT) the following new paragraph: " (18) I n the case of a trust which is part of a plan providing a defined benefit for employees some or all of whom are employees within the meaning of subsection (c)(1), or are shareholderemployees within the meaning of section 1379(d), only if such plan satisfies the requirements of subsection (j). " (2) Section 401 (relating to qualified pension, profit-sharing, and stock bonus plans) is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection: " (j) DEFINED BENEFIT PLANS PROVIDING BENEFITS FOR EMPLOYED INDIVIDUALS AND SHAREHOLDER-EMPLOYEES.—

SELF-

"(1) IN GENERAL.—A defined benefit plan satisfies the requirements of this subsection only if the basic benefit accruing under the plan for each plan year of participation by an employee within the meaning of subsection (c)(1) (or a shareholder-employee) is permissible under regulations prescribed by the Secretary or his delegate under this subsection to insure that there will be reasonable comparability (assuming level funding) between the maximum retirement benefits which may be provided with favorable tax treatment under this title for such employees under— " (A) defined contribution plans, " (B) defined benefit plans, and " (C) a combination of defined contribution plans and defined benefit plans. "(2) GUIDELINES FOR REGULATIONS.—The regulations prescribed under this subsection shall provide that a plan does not satisfy the requirements of this subsection if, under the plan, the basic benefit of any employee within the meaning of subsection (c)(1) (of" a shareholder-employee) may exceed the sum of the products for each plan year of participation of— " (A) his annual compensation (not in excess of $50,000) for such year, and " (B) the applicable percentage determined under paragraph (3). " (3) APPLICABLE PERCENTAGE.—

" (A) TABLE.—For purposes of paragraph (2), the applicable percentage for any individual for any plan year shall be based on the percentage shown on the following table opposite his age when his current period of participation in the plan began. ,,.

.

i.. •

i.-

V,

"Age when participation began: 30 or less 35 40 45 50 55 60 or over, " (B) ADDITIONAL REQUIREMENTS.—The

Applicable

percentage 6.5 5.4 4.4 3.6 3.0 2.5 2. 0

regulations prescribed under this subsection shall include provisions— " (i) for applicable percentages for ages between any two ages shown on the table, "(ii) for adjusting the applicable percentages in the case of plans providing benefits other than a basic benefit.

^"'^' P- "^52.

26 USC 1379. 26 USC 401.

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PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

"(iii) that any increase in the rate of accrual, and any increase in the compensation base which may be taken into account, shall, with respect only to such increase, begin a new period of participation in the plan, and "(iv) when appropriate, in the case of periods beginning after December 31, 1977, for adjustments in the applicable percentages based on changes in prevailing interest and mortality rates occurring after 1973. "(4)

26 USC 1401. 26 USC 3101. 42 USC 401.

26 USC 1379.

Ante, p. 952.

CERTAIN

Repeal.

BENEFITS

MAY

NOT BE

TAKEN INTO ACCOUNT,—A defined benefit plan which provides contributions or benefits for owner-employees does not satisfy the requirements of this subsection unless such plan meets the requirements of subsection (a)(4) without taking into account contributions or benefits under chapter 2 (relating to tax on selfemployment income), chapter 21 (relating to Federal Insurance Contributions Act), title II of the Social Security Act, or any other Federal or State law. '' (5) DEFINITIONS.—For purposes of this subsection— " (A) BASIC BENEFIT.—The term 'basic benefit' means a benefit in the form of a straight life annuity commencing at the later of— " (i) age 65, or "(ii) the day 5 years after the day the participant's current period of participation began under a plan which provides no ancillary benefits and to which employees do not contribute. "(B) SHAREHOLDER-EMPLOYEE.—The term 'shareholderemployee' has the same meaning as when used in section 1379(d). " (C) COMPENSATION.—The term 'compensation' means— "(i) in the case of an employee within the meaning of subsection (c)(1), the earned income of such individual, or "(ii) in the case of a shareholder-employee, the compensation received or accrued by the individual from the electing small business corporation. " (6) SPECIAL RULES.—Section 404(e) (relating to special limitations for self-employed individuals) and section 1379(b) (relating to taxability of shareholder-employee beneficiaries) do not apply to a trust to which this subsection applies.", (e) REPEAL or BUTIONS.—

26 USC 401.

CONTRIBUTIONS AND

EXISTING TAX TREATMENT OF EXCESS CONTRI-

(1) The last sentence of section 401(d)(5) is amended to read as follows: "Subparagraphs (A) and (B) do not apply to contributions described in subsection (e)." (2) Paragraph (8) of section 401(d) is repealed. (3) Subsection (e) of section 401 is amended to read as follows: "(e)

CONTRIBUTIONS FOR PREMIUMS ON A N N U I T Y, ETC.,

CON-

TRACTS.—A contribution by the employer on behalf of an owneremployee is described in this subsection if— " (1) under the plan such contribution is required to be applied (directly or through a trustee) to pay premiums or other consideration for one or more annuity, endowment, or life insurance contracts on the life of such owner-employee issued under the plan, "(2) the amount of such contribution exceeds the amount deductible under section 404 with respect to contributions made by the employer on behalf of such owner-employee under the plan, and " (S) the amount of such contribution does not exceed the average 01 the amounts which were deductible under section 404 with

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PUBLIC LAW 93-406-SEPT. 2, 1974

respect to contributions made by the employer on behalf of such owner-employee under the plan (or which would have been deductible if such section had been in effect) for the first three taxable years (A) preceding the year in which the last such annuity, endowment, or life insurance contract was issued under the plan, and (B) in which such owner-employee derived earned income from the trade or business with respect to which the plan is established, or for so many of such taxable years as such owneremployee was engaged in such trade or business and derived earned income therefrom. In the case of any individual on whose behalf contributions described in paragraph (1) are made under more than one plan as an owneremployee during any taxable year, the preceding sentence does not apply if the amount of such contributions under all such plans for all such years exceeds $7,500. Any contribution which is described in this subsection shall, for purposes of section 4972(b), be taken into account as a contribution made by such owner-employee as an employee to the extent that the amount of suoh contribution is not deductible under section 404 for the taxable year, but only for the purpose of applying section 4972(b) to other contributions made by such owner-employee as an employee." (4) Clause (ii) of section 401(a) (10)(A) is amended by striking out "subsection (e)(3)(A) " and inserting in lieu thereof "subsection (e)". (5) Subparagraph (A) of section 72(m)(5)(A) is amended— ^A) by inserting "and" at the end of clause (i), '" (B) by striking out the comma at the end of clause (ii) and the word "and" following that comma, and inserting in lieu thereof a period, and (C) by striking out clause (iii).

955

^"^'•^• 26 USC 404. 26 USC 40i. ^^ use 72.

(f) TAX ON EXCESS CONTRIBUTIONS.—

(1) Chapter 43 (relating to qualified pension, etc., plans) is amended by inserting after section 4971 the following new section: "SEC. 4972. TAX ON EXCESS CONTRIBUTIONS FOR SELF-EMPLOYED INDIVIDUALS. " (a) TAX IMPOSED.—In the case of a plan which provides contributions or benefits for employees some or all of whom are employees within the meaning of section 401(c)(1), there is imposed, for each taxable year of the employer who maintains such plan, a tax in an amount equal to 6 percent of the amount of the excess contributions under the plan (determined as of the close of the taxable year). The tax imposed by this subsection shall be paid by the employer who maintains the plan. This section applies only to plans which include a trust described in section 401(a), which are described in section 403(a), or which are described in section 405(a). "(b)

26 USC 4972.

2^ use 401,

EXCESS CONTRIBUTIONS.—

"(1) IN GENERAL.—For purposes of this section, the term 'excess contributions' means the sum of the amounts (if any) determined under paragraphs (2), (3), and (4), reduced by the sum of the correcting distributions (as defined in paragraph (5)) made in all prior taxable years beginning after December 31, 1975. For purposes of this subsection the amount of any contribution which is allocable (determined under regulations prescribed by the Secretary or his delegate) to the purchase of life, accident, health, or other insurance shall not be taken into account. " (2) CONTRIBUTIONS BY OWNER-EMPLOYEES.—The amount determined under this paragraph, in the case of a plan which provides contributions or benefits for employees some or all of whom are

''Excess cont r i "u t i o n s. ' b

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Page:United States Statutes at Large Volume 88 Part 1.djvu/1000

 956 26 USC 401.

PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

owner-employees (within the meaning of section 401(c)(3)), is the sum of— " (A) the excess (if any) of— " (i) the amount contributed under the plan by each owner-employee (as an employee) for the taxable year, over "(ii) the amount permitted to be contributed by each owner-employee (as an employee) for such year, and " (B) the amount determined under this paragraph for the preceding taxable year of the employer, reduced by the excess (if any) of the amount described in subparagraph (A) (ii) over the amount described in subparagraph (A)(i). "(3) DEFINED BENEFIT PLANS.—The amount determined under this paragraph, in the case of a defined benefit plan, is the amount contributed under the plan by the employer during the taxable year or any prior taxable year beginning after December 31, 1975, if— " (A) as of the close of the taxable year, the full funding limitation of the plan (determined under section 412(c)(7)) is zero, and " (B) such amount has not been deductible for the taxable year or any prior taxable year. "(4) DEFINED CONTRIBUTION PLANS.—The amount determined under this paragraph, in the case of a plan other than a defined benefit plan, is the portion of the amounts contributed under the plan by the employer during the taxable year and each prior taxable year beginning after December 31, 1975, which has not been deductible for the taxable year or any prior taxable year. "(5) CORRECTING DISTRIBUTION.—For purposes of this subsection the term 'correcting distribution' means— " (A) in the case of a contribution made by an owneremployee as an employee, regardless of the type of plan, the amount determined under paragraph (2) distributed to the owner-employee who contributed such amount, " (B) in the case of a defined benefit plan, the amount determined under paragraph (3) which is distributed from the plan to the employer, and " (C) in the case of a defined contribution plan, the amount determined under paragraph (4) which is distributed from the plan to the employer or to the employee to the account of whom the amount described was contributed. "(c)

AMOUNT

PERMITTED

To

BE

CONTRIBUTED

BY

OWNER-

EMPLOYEE.—For purposes of subsection (b)(2), the amount permitted to be contributed under a plan by an owner-employee (as an employee) for any taxable year is the smallest of the following: "(1) $2,500, "(2) 10 percent of the earned income (as defined in section 401(c)(2)) for such taxable year derived by such owneremployee from the trade or business with respect to which the plan is established, or "(3) the amount of the contribution which would be contributed by the owner-employee (as an employee) if such contribution were made at the rate of contributions permitted to be made by employees other than owner-employees. I n any case in which there are no employees other than owneremployees, the amount determined under the preceding sentence shall be zero.

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957

" (d) CROSS KEFERENCE.—

"For disallowance of deduction for taxes paid under this section, see section 275.". (2) CLERICAL AMENDMENT.—The table of sections for chapter 43 is amended by inserting after the item relating to section 4971 the following new item: "Sec, 4972. Tax on excess contributions for self-employed individuals.". (g) PREMATURE DISTRIBUTIONS TO OWNER-EMPLOYEES.—

(1) IN GENERAL.—Subparagraph (B) of section 72(m)(5) (relating to penalties applicable to certain amounts received by owner-employees) is amended to read as follows: " (B) I f a person receives an amount to which this paragraph applies, his tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of the amount so received which is includible in his gross income for such taxable year."

26 USC 72.

(2) CONFORMING AMENDMENTS.—

(A) Subparagraphs (C), (D), and (E) of section 72(m) Repeals. (5) are repealed. (B) The second sentence of section 46(a)(3) and the sec- 26 USC 46. ond sentence of section 50A(a)(3), as each is amended by 26 USC 5OA. section 2005(c)(4) of this Act, are each amended by inserting Post, p. 987. after "tax preferences)," the following: "section 72(m)(5) (B) (relating to 10 percent tax on premature distributions supra. to owner-employees),". (C) The third sentence of section 901(a), as amended by ^^ ^^'^ ^°^* section 2005(c)(5) of this Act, is amended by striking out "tax preferences)," and inserting in lieu thereof "tax preferences), against the tax imposed for the taxable year under section 72(m)(5)(B) (relating to 10 percent tax on premature distributions to owner-employees),". (D) Subparagraph (A) of section 56(a)(2) and para- 26 USC 56. graph (1) of section 56(c), as each is amended by section 2005(c)(7) of this Act, are each amended by striking out "402(e)" and inserting in lieu thereof "72(m)(5)(B), 402 (E) Section 404(a)(2) is amended by striking out " ( 1 6) " and inserting in lieu thereof "(16), (17), (18)". (F) Clause (ii) of section 4 0 4 (a)(9)(B) is amended to read as follows: "(ii) without regard to the second sentence of paragraph (3); and", (h) WITHDRAWAL EMPLOYEES.—

OF EMPLOYEE

CONTRIBUTIONS

or

OWNER-

(1) Section 4 0 1 (d)(4)(B) (relating to additional requirements for qualification of trusts and plans benefiting owneremployees) is amended by inserting "in excess of contributions made by an owner-employee as an employee" after "benefits". (2) Paragraph (1) of section 72(m) (relating to certain amounts received before annuity starting date) is repealed. (3) Section 72(m)(5)(A)(i) is amended by striking out "(whether or not paid by h i m) " and inserting in lieu thereof the following: "(other than contributions made by him as an owneremployee)". (i)

^^ "^^ ^°^-

EFFECTIVE DATES.—

(1) The amendments made by subsections (a) and (b) apply to taxable years beginning after December 31, 1973.

26use4oi.

Repeal.

26 USC 404 note.

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PUBLIC LAW 93-406-SEPT. 2, 1974

[88

STAT.

26 USC 401

(2) The amendments made by subsection (c) apply to— note (A) taxable years beginning after December 31, 1975, and (B) any other taxable years beginning after December 31, 1973, for which contributions were made under the plan in excess of the amounts permitted to be made under sections Ante, p. 952. 404(e) aud 1379(b) as in effect on the day before the date of the enactment of this Act. 26 USC 401 (3^ The amendments made by subsection (d) apply to taxable note years beginning after December 31, 1975. 26 USC 401 ' ^4^ -j^jjg amendments made by subsections (e) and (f) apply note to contributions made in taxable years beginning after December 31, 1975. 26 USC 72 note. (5) x h c amendments made by subsection (g) apply to distributions made in taxable years beginning after December 31, 1975. 26 USC 72 note. ^g^ jj^g amendments made by subsection (h) apply to taxable years ending after the date of enactment of this Act. SEC. 2002. DEDUCTION FOR RETIREMENT SAVINGS. (a)

26 USC 211. 26 USC 220.

26 USC 219.

26 USC 408.

26 USC 409.

26 USC 401,

ALLOWANCE OF DEDUCTION.—

(1) IN GENERAL.—Part VII of subchapter B of chapter 1 (relating to additional itemized deductions for individuals) is amended by redesignating section 219 as 220 and by inserting after section 218 the following new section: ..§£(. 219. RETIREMENT SAVINGS. " (a) DEDUCTION ALLOWED.—In the case of an individual, there is allowed as a deduction amounts paid in cash during the taxable year by or on behalf of such individual for his benefit— "(^2) to an individual retirement account described in section 408(a), "(2) for an individual retirement annuity described in section 408(b), or "(3) for a retirement bond described in section 409 (but only if the bond is not redeemed within 12 months of the date of its issuance). For purposes of this title, any amount paid by an employer to such a retirement account or for such a retirement annuity or retirement bond constitutes payment of compensation to the employee (other than a self-employed individual who is an employee within the meaning of section 401(c)(1) includible in his gross income, whether or not a deduction for such payment is allowable under this section to the employee after the application of subsection (b). "(b)

LIMITATIONS AND RESTRICTIONS.— " (1) MAXIMUM DEDUCTION.—The amount

allowable as a deduction under subsection (a) to an individual for any taxable year may not exceed an amount equal to 15 percent of the compensation includible in his gross income for such taxable year, or $1,500, whichever is less. "(2)

26 USC 501 26 USC 403 26 USC 405.

COVERED BY CERTAIN OTHER PLANS.—No

deduction

is

allowed under subsection (a) for an individual for the taxable year if for any part of such year— " (A) he was an active participant in— " (i) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a), "(ii) an annuity plan described in section 403(a), "(iii) a qualified bond purchase plan described in section 405(a), or "(iv) a plan established for its employees by the United States, by a State or political division thereof, or

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PUBLIC LAW 93-406-SEPT. 2, 1974

by an agency or instrumentality of any of the foregoing, or " (B) amounts were contributed by his employer for an annuity contract described in section 403(b) (whether or not his rights in such contract are nonforfeitable).

959

26 USC 403.

" (3) CONTRIBUTIONS AFITIR AGE TOJ.—No deduction is allowed

under subsection (a) with respect to any payment described in subsection (a) which is made during the taxable year of an individual who has attained age TOi^ before the close of such taxable year. "(4) EECONTRIBUTED AMOUNTS.—No deduction is allowed under this section with respect to a rollover contribution described in section 402(a)(5), 403(a)(4), 408(d)(3), or 409(b)(3)(C). J,%'u'''" ' ' ' ' " (5) AMOUNTS CONTRIBUTED UNDER ENDOWMENT CONTRACT.—

I n the case of an endowment contract described in section 408(b), no deduction is allowed under subsection (a) for that portion of the amounts paid under the contract for the taxable year properly allocable, under regulations prescribed by the Secretary or his delegate, to the cost of life insurance.

^"^'•°-

" (c) DEFINITIONS AND SPECIAL RULES.—

"(1) COMPENSATION.—For purposes of this section, the term 'compensation' includes earned income as defined in section 401(c)(2). "(2) MARRIED INDIVIDUALS.—The

26 USC 401.

maximum deduction under subsection (b)(1) shall be computed separately for each individual, and this section shall be applied without regard to any community property laws.". (2)

DEDUCTION ALLOWED I N ARRIVING AT ADJUSTED GROSS

INCOME.—Section 62 (defining adjusted gross income) is amended by inserting after paragraph (9) the following new paragraph: "(10) RETIREMENT SAVINGS.—The deduction allowed by section 219 (relating to deduction of certain retirement savings).". ^"'^' P- ^^^• (b) INDIVIDUAL RETIREMENT ACCOUNTS.—Subpart A of part I of subchapter D of chapter 1 (relating to retirement plans) is amended ^^ ^^*^ '*°^by adding at the end thereof the following new section: "SEC. 408. INDIVIDUAL RETIREMENT ACCOUNTS. 26 USC 408. " (a) INDIVIDUAL RETIREMENT ACCOUNT.—For purposes of this section, the term 'individual retirement account' means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets the following requirements: "(1) Except in the case of a rollover contribution described in subsection (d)(3) in section 402(a)(5), 403(a)(4), or 409 (b)(3)(C), no contribution will be accepted unless it is in cash, and contributions will not be accepted for the taxable year in excess of $1,500 on behalf of any individual. "(2) The trustee is a bank (as defined in section 401(d)(1)) or such other person who demonstrates to the satisfaction of the Secretary or his delegate that the manner in which such other person will administer the trust will be consistent with the requirements of this section. " (3) No part of the trust funds will be invested in life insurance contracts. " (4) The interest of an individual in the balance in his account is nonforfeitable. "(5) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.

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 960

PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

"(6) The entire interest of an individual for whose benefit the trust is maintained will be distributed to him not later than the close of his taxable year in which he attains age 701/^, or will be distributed, commencing before the close of such taxable year, in accordance with regulations prescribed by the Secretary or his delegate, over— " (A) the life of such individual or the lives of such individual and his spouse, or " (B) a period not extending beyond the life expectancy of such individual or the life expectancy of such individual and his spouse. "(7) I f an individual for whose benefit the trust is maintained dies before his entire interest has been distributed to him, or if distribution has been commenced as provided in paragraph (6) to his surviving spouse and such surviving spouse dies before the entire interest has been distributed to such spouse, the entire interest (or the remaining part of such interest if distribution thereof has comnjenced) will, within 5 years after his death (or the death of the surviving spouse), be distributed, or applied to the purchase of an immediate annuity for his beneficiary or beneficiaries (or the beneficiary or beneficiaries of his surviving spouse) which will be payable for the life of such beneficiary or beneficiaries (or for a term certain not extending beyond the life expectancy of such beneficiary or beneficiaries) and which annuity will be immediately distributed to such beneficiary or beneficiaries. The preceding sentence does not apply if distributions over a term certain commenced before the death of the individual for whose benefit the trust was maintained and the term certain is for a period permitted under paragraph (6). "(b) INDIVIDUAL RETIREMENT A N N U I T Y. — For purposes of this section, the term 'individual retirement annuity' means an annuity contract, or an endowment contract (as determined under regulations prescribed by the Secretary or his dele^^ate), issued by an insurance company which meets the following requirements: " (1) The contract is not transferable by the owner. "(2) The annual premium under the contract will not exceed $1,500 and any refund of premiums will be applied before the close of the calendar year following the year of the refund toward the payment of future premiums or the purchase of additional benefits. "(3) The entire interest of the owner will be distributed to him not later than the close of his taxable year in which he attains age 7014, or will be distributed, in accordance with regulations prescribed by the Secretary or his delegate, over— " (A) the life of such owner or the lives of such owner and his spouse, or " (B) a period not extending beyond the life expectancy of such owner or the life expectancy of such owner and his spouse. " (4) If the owner dies before his entire interest has been distributed to him, or if distribution has been commenced as provided in paragraph (3) to his surviving spouse and such surviving spouse dies before the entire interest has been distributed to such spouse, the entire interest (or the remaining Dart of such interest if distribution thereof has commenced) will, within 5 years after his death (or the death of the surviving spouse), be distributed, or applied to the purchase of an immediate annuity for his beneficiary or beneficiaries (or the beneficiary or beneficiaries of his surviving spouse) which will be payable for the life of such bene-

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 88 STAT. ]

PUBLIC LAW 93-406-SEPT. 2, 1974

951

ficiary or beneficiaries (or for a term certain not extending beyond the life expectancy of such beneficiary or beneficiaries) and which annuity will be immediately distributed to such beneficiary or beneficiaries. The preceding sentence shall have no application if distributions over a term certain commenced before the death of the owner and the term certain is for a period permitted under paragraph (3). " (5) The entire interest of the owner is nonforfeitable. Such term does not include such an annuity contract for any taxable year of the owner in which it is disqualified on the application of subsection (e) or for any subsequent taxable year. For purposes of this subsection, no contract shall be treated as an endowment contract if it matures later than the taxable year in which the individual in whose name such contract is purchased attains age 701/^; if it is not for the exclusive benefit of the individual in whose name it is purchased or his beneficiaries; or if the aggregate annual premiums under all such contracts purchased in the name of such individual for any taxable year exceed $1,500. "(c) ACCOUNTS ESTABLISHED BY EMPLOYERS AND CERTAIN ASSOCIATIONS or EMPLOYEES.—A trust created or organized in the United

States by an employer for the exclusive benefit of his employees or their beneficiaries, or by an association of employees (which may include employees within the meaning of section 401(c)(1)) for the exclusive benefit of its members or their beneficiaries, shall be treated as an individual retirement account (described in subsection (a)), but only if the written governing instrument creating the trust meets the following requirements: "(1) The trust satisfies the requirements of paragraphs (1) through (7) of subsection (a). "(2) There is a separate accounting for the interest of each employee or member. The assets of the trust may be held in a common fund for the account of all individuals who have an interest in the trust. "(d)

^^ ^^^ '*^^-

T A X TREATMENT OF DISTRIBUTIONS.—

"(1) IN GENERAL.—Except as otherwise provided in this subsection, any amount paid or distributed out of an individual retirement account or under an individual retirement annuity shall be included in gross income by the payee or distributee, as the case may be, for the taxable year in which the payment or distribution is received. The basis of any person in such an account or annuity is zero. "(2)

DISTRIBUTIONS or ANNUITY CONTRACTS.—Paragraph

(1)

does not apply to any annuity contract which meets the requirements of paragraphs (1), (3), (4), and (5) of subsection (b) and which is distributed from an individual retirement account. Section 72 applies to any such annuity contract, and for purposes of section 72 the investment in such contract is zero. "(3) ROLLOVER CONTRIBUTION.—An amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs (A) and (B). " (A) IN GENERAL.—Paragraph (1) does not apply to any amount paid or distributed out of an individual retirement account or individual retirement annuity to the individual for whose benefit the account or annuity is maintained if— "(i) the entire amount received (including money and any other property) is paid into an individual retirement account or individual retirement annuity (other than an endowment contract) or retirement bond

26 USC 72.

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Page:United States Statutes at Large Volume 88 Part 1.djvu/1006

 962

26 USC 401 501.

26 USC 403.

PUBLIC LAW 93-406-SEPT. 2, 1974

for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution; or "(ii) the entire amount received (including money and any other property) represents the entire amount in the account or the entire value of the annuity and no amount in the account and no part of the value of the annuity is attributable to any source other than a rollover contribution from an employees' trust described in section 401(a) which is exempt from tax under section 501(a) (other than a trust forming part of a plan under which the individual was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan), or an annuity plan described [YI section 403(a) (other than a plan under which the individual was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan) and any earnings on such sums and the entire amount thereof is paid into another such trust (for the benefit of such individual) or annuity plan not later than the 60th day on which he receives the payment or distribution. " (B) LIMITATION.—This paragraph does not apply to any amount described in subparagraph (A)(i) received by an individual from an individual retirement account or individual retirement annuity if at any time during the 3-year period ending on the day of such receipt such individual received any other amount described in that subparagraph from an individual retirement account, individual retirement annuity, or a retirement bond which was not includible in his gross income because of the application of this paragraph. "(4)

Ante, p. 958.

[88 STAT.

EXCESS CONTRIBUTIONS RETURNED BEFORE DUE DATE OF

RETURN.—Paragraph (1) does not apply to the distribution of any contribution paid during a taxable year to an individual retirement account or for an individual retirement annuity to the extent that such contribution exceeds the amount allowable as a deduction under section 219 if— " (A) such distribution is received on or before the day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, " (B) no deduction is allowed under section 219 with respect to such excess contribution, and " (C) such distribution is accompanied by the amount of net income attributable to such excess contribution. Any net income described in subparagraph (C) shall be included in the gross income of the individual for the taxable year in which received. "(5) TRANSFER OF ACCOUNT INCIDENT TO DIVORCE.—The transfer of an individual's interest in an individual retirement account, individual retirement annuity, or retirement bond to his former spouse under a divorce decree or under a written instrument incident to such divorce is not to be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle, and such interest at the time of the transfer is to be treated as an individual retirement account of such spouse, and not of such individual. Thereafter such account, annuity, or bond for purposes of this subtitle is to be treated as maintained for the benefit of such spouse.

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PUBLIC LAW 93-406-SEPT. 2, 1974

963

" (e) TAX TREATMENT OF ACCOUNTS AND A N N U I T I E S. — "(1) EXEMPTION FROM TAX.—Any individual retirement

account is exempt from taxation under this subtitle unless such account has ceased to be an individual retirement account by reason of paragraph (2) or (3). Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations).

26 USC sii.

" (2) L o s s OF EXEMPTION OF ACCOUNT WHERE EMPLOYEE ENGAGES IN PROHIBITED TRANSACTION.—

" (A) IN GENERAL.—If, during any taxable year of the individual for whose benefit any individual retirement account is established, that individual or his beneficiary engages in any transaction prohibited by section 4975 with respect to such account, such account ceases to be an individual retirement account as of the first day of such taxable year. For purposes of this paragraph— "(i) the individual for whose benefit any account was established is treated as the creator of such account, and "(ii) the separate account for any individual within an individual retirement account maintained by an employer or association of employees is treated as a separate individual retirement account. "(B)

ACCOUNT TREATED AS DISTRIBUTING ALL ITS ASSETS.—

In any case in which any account ceases to be an individual retirement account by reason of subparagraph (A) as of the first day of any taxable year, paragraph (1) of subsection (d) applies as if there were a distribution on such first day in an amount equal to the fair market value (on such first day) of all assets in the account (on such first day). "(3) EFFECT OF BORROWING ON ANNUITY CONTRACT.—If during any taxable year the owner of an individual retirement annuity borrows any money under or by use of such contract, the contract ceases to be an individual retirement annuity as of the first day of such taxable year. Such owner shall include in gross income for such year an amount equal to the fair market value of such contract as of such first day. "(4) EFFECT OF PLEDGING ACCOUNT AS SECURITY.—If, during any taxable year of the individual for whose benefit an individual retirement account is established, that individual uses the account or any portion thereof as security for a loan, the portion so used is treated as distributed to that individual. " (5)

PURCHASE OF ENDOWMENT CONTRACT BY INDIVIDUAL RETIRE-

MENT ACCOUNT.—If the assets of an individual retirement account or any part of such assets are used to purchase an endowment contract for the benefit of the individual for whose benefit the account is established— " (A) to the extent that the amount of the assets involved in the purchase are not attributable to the purchase of life insurance, the purchase is treated as a rollover contribution described in subsection (d)(3), and " (B) to the extent that the amount of the assets involved in the purchase are attributable to the purchase of life, health, accident, or other insurance, such amounts are treated as distributed to that individual (but the provisions of subsection (f) do not apply). "(6) COMMINGLING INDIVIDUAL RETIREMENT ACCOUNT AMOUNTS IN CERTAIN COMMON TRUST FUNDS AND COMMON INVESTMENT

FUNDS.—Any common trust fund or common investment fund of

^osf, p. 971.

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text:
Page:The Eurypterida of New York Volume 1.pdf/90

Echinognathus clevelandi Walcott. Oneida county, N. Y.

Eurypterus megalops nov.

E. pristinus nov.

E. ? (Dolichopterus ?) stellatus nov. Eusarcus triangulatus nov.

E. ? longiceps nov.

Dolichopterus frankfortensis nov.

D. latifrons nov.

Hughmilleria magna nov.

Pterygotus nasutus nov.

P. prolificus nov.

Stylonurus ? limbatus nov.


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26 USC 501, 401.

PUBLIC LAW 93-406-SEPT. 2, 1974

[88 STAT.

individual retirement account assets which is exempt from taxation under this subtitle does not cease to be exempt on account of the participation or inclusion of assets of a trust exempt from taxation under section 501(a) which is described in section 401(a). "(f) ADDITIONAL TAX ON CERTAIN AMOUNTS INCLUDED I N GROSS INCOME BEFORE AGE 591/^— "(1) EARLY DISTRIBUTIONS FROM AN INDIVIDUAL RETIREMENT ACCOUNT, ETC.—If a distribution from an individual retirement

account or under an individual retirement annuity to the individual for whose benefit such account or annuity was established is made before such individual attains age 591/^, his tax under this chapter for the taxable year in which such distribution is received shall be increased by an amount equal to 10 percent of the amount of the distribution which is includible in his gross income for such taxable year. "(2) DISQUALIFICATION CASES.—If an amount is includible in gross income for a taxable year under subsection (e) and the taxpayer has not attained age 591/^ before the beginning of such taxable year, his tax under this chapter for such taxable year shall be increased by an amount equal to 10 percent of such amount so required to be included in his gross income. "(3) DISABILITY CASES.—Paragraphs (1) and (2) do not apply if the amount paid or distributed, or the disqualification of the account or annuity under subsection (e), is attributable to the taxpayer becoming disabled within the meaning of section 72(m)

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" (g) COMMUNITY PROPERTY LAWS.—This section shall be applied without regard to any community property laws. " (h) CUSTODIAL ACCOUNTS.—For purposes of this section, a custodial account shall be treated as a trust if the assets of such account are held by a bank (as defined in section 401(d)(1)) or another person who demonstrates, to the satisfaction of the Secretary or his delegate, that the manner in which he will administer the account will be consistent with the requirements of this section, and if the custodial account would, except for the fact that it is not a trust, constitute an individual retirement account described in subsection (a). For purposes of this title, in the case of a custodial account treated as a trust l3y reason of the preceding sentence, the custodian of such account shall be treated as the trustee thereof. " (i) REPORTS.—The trustee of an individual retirement account and the issuer of an endowment contract described in subsection (b) or an individual retirement annuity shall make such reports regarding such account, contract, or annuity to the Secretary or his delegate and to the individuals for whom the account, contract, or annuity is, or is to be, maintained with respect to contributions, distributions, and such other matters as the Secretary or his delegate may require under regulations. The reports required by this subsexition shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by those regulations. " (j) CROSS REFERENCES.—

Ante, p. 959. 26 USC 409. Anfe, p. 95 8.

"(1) For tax on excess contributions in individual retirement accounts or annuities, see section 4973. "(2) For tax on certain accumulations in individual retirement accounts or annuities, see section 4974." (c) RETIREMENT BONDS.—Subpart A of part I of subchapter D of chapter 1 (relating to retirement plans) is amended by inserting after sBction 408 the following new section: «gEC. 409. RETIREMENT BONDS. " (a) RETIREMENT BOND.—For purposes of this section and section 219(a), the term 'retirement bond' means a bond issued under the

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