a September 2, 1974 - 163 - Pub. Law 93-406 88 STAT. 991 “(B) the denominator of which is the number of calendar years of active participation by the employee in such plan, shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of computing the fraction described in this paragraph and the fraction under subsection (e) (4) (E), the Secretary or his delegate may prescribe regulations under which plan years may be used in lieu of calendar years. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401(c) (1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e) (4) (B), but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sun distribution under this paragraph.” (2) AMENDMENT OF SECTION 403.—That part of paragraph (2) of section 403(a) which follows clause (ii) of subparagraph (A) thereof is amended to read as follows: “(iii) a lump sum distribution (as defined in section 402(e) (4) (A)) is paid to the recipient, Ante, p. 987. "(B) (CROSS REFERENCE.---- sum distribution, see section 402(e).". Repeals, (2) Paragraph (5) (as in effect on December 31, 1973) of sec 26 USC 402. tion 402 (a) is ropealed. (3) Section 72 is amended by striking out subsection (n) thereof and by redesignating subsections (0) and (p) as (n) and (o), respectively. (4) The second sentence of section 46(a) (3) and the second sentence of section 50A (a) (3) are each amended by inserting after “tax preferences)," the following: "section 402(e) (relating to tax on lump sum distributions),”. (5) The third sentence of section 901 (a) is amended by inserting “against the tax imposed by section 402(e) (relating to tax on lump sum distributions),” before "against the tax imposed by section 531”. (6) Subsection 1304 (b) (2) (relating to special rules) is amended by striking out paragraph (2) and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (2), (3), (4), and (5), respectively, (7) Subparagraph (A) of section 56(a)(2) and paragraph (1) of section 56(c) are each amended by inserting before “5:31” the following: "402(e).". Pub. Law 93-406 - 164 September 2, 1974 88 STAT. 992 26 USC 871, (8) Sections 871 (b)(1) and 877(b) are each amended by inserting“, 402(e) (1),"after"section 1”. (9) Section 62 (defining adjusted gross income), is amended by inserting after paragraph (10) the following new paragraph: “(11) CERTAIN PORTION OF LUMP-SUM DISTRIBUTIONS FROM PENSION PLANS TAXED UNDER SECTION 402(e).—The deduction allowed by section 402(e) (3).” (10) Section 122(b) (2) (relating to consideration for the contract) is amended by striking out “72(0)” and inserting “72(n)”. (11) Section 405(e) (relating to capital gains treatment and limitation of tax not to apply to bonds distributed by trusts) is amended by striking out "Section 72(n) and section 402(a) (2)” and inserting “Subsections (a) (2) and (e) of section 402”. (12) Section 406(c) (relating to termination of status as deemed employee, etc.) is amended by striking out "section 72 (n), section 402(a) (2)" and inserting "subsections (a) (2) and (e) of section 402”. (13) Section 407(c) (relating to termination of status as deemed employee, etc.) is amended by striking out "section 72(n), section 402(a) (2)" and inserting "subsections (a) (2) and (e) of section 402”. (14) Section 1348 (b)(1) (relating to earned income) is amended by striking out "72(n), 402(a) (2)” and inserting “402 (a) (2), 402(e)". (15) Section 101 (b) (2) (B) is amended by striking out "total distributions payable (as defined in section 402(a) (3)) which are paid to a distributee within one taxable year of the distributee by reason of the employee's death” and inserting in lieu thereof “a lump sum distribution (as defined in section 402(e) (4))”. (d) EFFECTIVE DATE.— The amendments made by this section shall apply only with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date. SEC. 2006. SALARY REDUCTION REGULATIONS. (a) Inclusion of CERTAIN CONTRIBUTIONS IN INCOME.—Except in the case of plans or arrangements in existence on June 27, 1974, a contribution made before January 1, 1977, to an employees' trust described in section 401(a), 403(a), or 405(a) of the Internal Revenue Code of 1954 which is exempt from tax under section 501(a) of such Code, or under an arrangement which, but for the fact that it was not in existence on June 27, 1974, would be an arrangement described in subsection (b)(2) of this section, shall be treated as a contribution made by an employee if the contribution is made under an arrangement under which the contribution will be made only if the employee elects to receive a reduction in his compensation or to forego an increase in his compensation. (b) ADMINISTRATION IN THE CASE OF CERTAIN QUALIFIED PENSION OR PROFIT-SHARING Plans, ETC., IN EXISTENCE ON JUNE 27, 1974.No salary reduction regulations may be issued by the Secretary of the Treasury in final form before January 1, 1977, with respect to an arrangement which was in existence on June 27, 1974, and which, on that date (1) provided for contributions to an employees' trust described in section 401 (a), 403(a), or 405 (a) of the Internal Revenue Code of 1954 which is exempt from tax under section 501(a) of such Code, or (2) was maintained as part of an arrangement under which an 26 USC 402 note. 26 USC 401 note. September 2, 1974 . 165 Pub. Law 93-406 88 STAT. 993 THE CASE OF PLANS DESCRIBED IN employee was permitted to elect to receive part of his compensation in one or more alternative forms if one of such forms results in the inclusion of amounts in income under the Internal Revenue Code of 1954. (c) ADMINISTRATION OF Law With RESPECT TO CERTAIN PLANS. (1) ADMINISTRATION IN SUBSECTION (b).-Until salary reduction regulations have been issued in final form, the law with respect to plans or arrangements described in subsection (b) shall be administered (A) without regard to the proposed salary reduction regulations (37 FR 25938) and without regard to any other proposed salary reduction regulations, and (B) in the manner in which such law was administered (A) Revenue Ruling 56497 (1956-2 C.B. 281), (C) Revenue Ruling 68–89 (1968—1 C.B. 402). (1) for purposes of chapter 1 of the Internal Revenue Code of 1954 (relating to normal taxes and surtaxes), such regulations 26 USC 1. shall not apply before January 1, 1977; and (2) for purposes of chapter 21 of such Code (relating to Federal Insurance Contributions Act) and for purposes of chapter 24 26 USC 3101, of such Code (relating to collection of income tax at source on 26 l'SC_3401. wages), such regulations shall not apply before the day on which such regulations are issued in final form. (e) SALARY REDUCTION REGULATIONS DEFINED—For purposes of this section, the term "salary reduction regulations” means regulations dealing with the includibility in gross income (at the time of contribution) of amounts contributed to a plan which includes a trust that qualifies under section 401(a), or a plan described in section 403 ( a ) 26 USC 401. or 405(a), including plans or arrangements described in subsection (b) (2), if the contribution is made under an arrangement under which the contribution will be made only if the employee elects to receive a reduction in his compensation or to forego an increase in his compensation, or under an arrangement under which the employee is permitted to elect to receive part of his compensation in one or more alternative forms (if one of such forms results in the inclusion of amounts in income under the Internal Revenue Code of 1954). 26 USC i et seq. SEC. 2008. CERTAIN ARMED FORCES SURVIVOR ANNUITIES. (a) TREATMENT OF CERTAIN PARTICIPANTS IN THE Plan.--Section 401(c) (relating to certain negotiated plans) is amended by inserting 26 USC 404. after the first sentence the following new sentences: “For purposes of this chapter and subtitle B, in the case of any individual who before July 1, 1974, was a participant in a plan described in the preceding sentence Pub. Law 93-406 - 166 September 2, 1974 88 STAT. 994 “(A) such individual, if he is or was an employee within the meaning of section 401(c)(1), shall be treated (with respect to service covered by the plan) as being an employee other than an employee within the meaning of section 401(c)(1) and as being an employee of a participating employer under the plan, “(B) earnings derived from service covered by the plan shall be treated as not being earned income within the meaning of section 401(c)(2), and (C) such individual shall be treated as an employee of a participating employer under the plan with respect to service before July 1, 1975, covered by the plan. Section 277 (relating to deductions incurred by certain membership organizations in transactions with members) does not apply to any trust described in this subsection.". (b) OTHER AMENDMENTS TO SEction 404 (c)(1). (1) Paragraph (1) of the first sentence of section 404 (c) is amended by striking out “and pensions” and inserting in lieu thereofor pensions". (2) The last sentence of section 401(c) is amended by striking out “This subsection” and inserting in lieu thereof “The first and third sentences of this subsection”. (c) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years ending on or after June 30, 1972. SEC. 2007. RULES FOR CERTAIN NEGOTIATED PLANS. (a) Ix GENERAL.--Section 122 (a) (relating to certain reduced uniformed services retired pay) is amended to read as follows: “(a) GENERAL RULE. - In the case of a member or former member of the uniformed services of the United States, gross income does not include the amount of any reduction in his retired or retainer pay pursuant to the provisions of chapter 73 of title 10, United States Code.". (b) TECHNICAL AMENDMENTS. (1) Section 122(b)(2) is amended by striking out "section 1438" in subparagraph (B) and inserting in lieu thereof "section 1438 or 1452(d)”. (2) Section 72(o) is amended by inserting after “Plan” in the heading of such section "or Survivor Benefit Plan”. (3) Section 101 (b)(2)(D) is amended by striking out "if the individual who made the election under such chapter" and inserting in lieu thereof “if the member or former member of the uniformed services by reason of whose death such annuity is payable". (4) Section 2039 (c) is amended by striking out "section 1438” in the last sentence and inserting in lieu thereof "section 1438 or 1452(d)”. (c) EFFECTIVE Dates.—The amendments made by this section apply to taxable years ending on or after September 21, 1972. The amendments made by paragraphs (3) and (4) of subsection (b) apply with respect to individuals dying on or after such date. 10 USC 1431. Ante, p. 991. 26 USC 122 note, September 2, 1974 - 167 Pub. Law 93-406 88 STAT. 995 TITLE III-JURISDICTION, ADMINISTRA TION, ENFORCEMENT; JOINT PENSION Enforcement PROCEDURES IN CONNECTION WITH THE ISSUANCE OF CERTAIN DETERMINA TION LETTERS BY THE SECRETARY OF THE TREASURY Sec. 3001.(a) Before issuing an advance determination of whether 29 USC 1201, a pension, profit-sharing, or stock bonus plan, a trust which is a part of such a plan, or an annuity or bond purchase plan meets the requirements of part I of subchapter D of chapter 1 of the Internal Revenue Code of 1954, the Secretary of the Treasury shall require the person 26 USC 401. applying for the determination to provide, in addition to any material and information necessary for such determination, such other material and information as may reasonably be made available at the time such application is made as the Secretary of Labor may require under title I of this Act for the administration of that title. The Secretary of Ante, p. 832. the Treasury shall also require that the applicant provide evidence satisfactory to the Secretary that the applicant has notified each employee who qualifies as an interested party (within the meaning of regulations prescribed under section 7476(b)(1) of such Code (relat- Ante, p. 949. ing to declaratory judgments in connection with the qualification of certain retirement plans)) of the application for a determination. (b)(1) Whenever an application is made to the Secretary of the Treasury for a determination of whether a pension, profit-sharing, or stock bonus plan, a trust which is a part of such a plan, or an annuity or bond purchase plan meets the requirements of part I of subchapter D of chapter 1 of the Internal Revenue Code of 1954, the Secretary shall upon request afford an opportunity to comment on the application at any time within 45 days after receipt thereof to (A) any employee or class of employee qualifying as an interested party within the meaning of the regulations referred to in subsection (a). (B) the Secretary of Labor, and (c) the Pension Benefit Guaranty Corporation. (2) The Secretary of Labor may not request an opportunity to comment upon such an application unless he has been requested in writing to do so by the Pension Benefit Guaranty Corporation or by the lesser of (A) 10 employees, or (B) 10 percent of the employees who qualify as interested parties within the meaning of the regulations referred to in subsection (a). Upon receiving such a request, the Secretary of Labor shall furnish a copy of the request to the Secretary of the Treasury within 5 days (excluding Saturdays, Sundays, and legal public holidays (as set forth in section 6103 of title 5, United States Code)). 80 Stat. 515; (3) Upon receiving such a request from the Secretary of Labor, 82 Stat. 250. the Secretary of the Treasury shall furnish to the Secretary of Labor such information held by the Secretary of the Treasury relating to the application as the Secretary of Labor may request. (4) The Secretary of Labor shall, within 30 days after receiving a request from the Pension Benefit Guaranty Corporation or from the |
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