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(d) REQUIREMENT THAT ANNUITY CONTRACTS WILL QUALIFY AS INDIVIDUAL RETIREMENT ANNUITY ONLY IF THE PREMIUMS ARE FLEXIBLE.

(1) IN GENERAL.-Paragraph (2) of section 408(b) (defining individual retirement annuity) is amended to read as follows: "(2) Under the contract

"(A) the premiums are not fixed,

"(B) the annual premium will not exceed $1,500, and "(C) 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."

(2) EFFECTIVE DATE.-The amendment made by paragraph (1) shall apply to contracts issued after the date of the enactment of this Act.

(3) TAX RELIEF FOR FIXED PREMIUM CONTRACTS HERETOFORE ISSUED.-In the case of any annuity or endowment contract issued on or before the date of the enactment of this Act which would be an individual retirement annuity within the meaning of section 408(b) of the Internal Revenue Code of 1954 (as amended by paragraph (1)) but for the fact that the premiums under the contract are fixed, at the election of the taxpayer an exchange before January 1, 1981, of that contract for an individual retirement annuity within the meaning of such section 408(b) (as amended by paragraph (1)) shall be treated as a nontaxable exchange which does not constitute a distribution.

(e) CLARIFICATION OF DOLLAR LIMIT IN THE CASE OF INDIVIDUAL RETIREMENT ANNUITIES AND RETIREMENT BONDS.

(1) IN GENERAL.—

(A) AMENDMENT OF SECTION 408(b)(2).-Subparagraph (B) of section 408(b)(2) (as amended by paragraph (1) of subsection (d)) is amended by inserting "on behalf of any individual" after "annual premium".

(B) AMENDMENT OF SECTION 409(a)(4).-Paragraph (4) of section 409(a) (relating to retirement bonds) is amended by inserting "on behalf of any individual" after "May not contribute".

(2) EFFECTIVE DATE.-The amendments made by paragraph (1) shall apply to taxable years beginning after December 31, 1976. (f) ROLLOVER OF PROCEEDS FROM SALE OF PROPERTY PERMITTED.

(1) ROLLOVERS FROM QUALIFIED EMPLOYEES' TRUSTS AND ANNUITIES.-Paragraph (6) of section 402(a) (relating to special rollover rules) is amended by adding at the end thereof the following new subparagraph:

"(D) SALES OF DISTRIBUTED PROPERTY.-For purposes of subparagraphs (5) and (7)—

"(i) TRANSFER OF PROCEEDS FROM SALE OF DISTRIBUTED

PROPERTY TREATED AS TRANSFER OF DISTRIBUTED PROP

ERTY.-The transfer of an amount equal to any portion of the proceeds from the sale of property received in the distribution shall be treated as the transfer of property received in the distribution.

"(ii) PROCEEDS ATTRIBUTABLE TO INCREASE IN VALUE.The excess of fair market value of property on sale over its fair market value on distribution shall be treated as property received in the distribution.

"(iii) DESIGNATION WHERE AMOUNT OF DISTRIBUTION EXCEEDS ROLLOVER CONTRIBUTION.-In any case where part or all of the distribution consists of property other than money, the taxpayer many designate

"(I) the portion of the money or other property which is to be treated as attributable to employee contributions, and

"(II) the portion of the money or other property which is to be treated as included in the rollover contribution.

Any designation under this clause for a taxable year shall be made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). Any such designation, once made, shall be irrevocable.

"(iv) TREATMENT WHERE NO DESIGNATION.-In any case where part or all of the distribution consists of property other than money and the taxpayer fails to make a designation under clause (iii) within the time provided therein, then

"(I) the portion of the money or other property which is to be treated as attributable to employee contributions, and

"(II) the portion of the money or other property which is to be treated as included in the rollover contribution

shall be determined on a ratable basis.

"(v) NONRECOGNITION OF GAIN OR LOSS.-In the case of any sale described in clause (i), to the extent that an amount equal to the proceeds is transferred pursuant to paragraph (5)(B) or (7)(B) (as the case by be), neither gain nor loss on such sale shall be recognized."

(2) EFFECTIVE DATE.-The amendment made by paragraph (1) shall apply to qualifying rollover distributions (as defined in section 402(a)(5)(D)(i) of the Internal Revenue Code of 1954) completed after December 31, 1978, in taxable years ending after such date.

(g) DISTRIBUTION FROM EMPLOYEES' QUALIFIED PLAN OR ANNUITY TO SPOUSE MAY BE ROLLOVER CONTRIBUTION TO AN INDIVIDUAL RETIREMENT PLAN.

(1) ROLLOVERS FROM QUALIFIED EMPLOYEES' TRUST.-Subsection (a) of section 402 (relating to taxability of beneficiary of exempt trust) is amended by adding at the end thereof the following new paragraph:

"(7) ROLLOVER WHERE SPOUSE RECEIVES LUMP-SUM DISTRIBUTION

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"(i) any portion of a lump-sum distribution from a qualified trust is paid to the spouse of the employee on account of the employee's death,

"(ii) the spouse transfers any portion of the property which the spouse receives in such distribution to an individual retirement plan, and

"(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,

then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.

"(B) CERTAIN RULES MADE APPLICABLE.-Rules similar to the rules of subparagraphs (B) through (E) of paragraph (5) and of paragraph (6) shall apply for purposes of this paragraph."

(2) ROLLOVER FROM QUALIFIED ANNUITY PLANS.-Subparagraph (B) of section 403(a)(4), as amended by section 21(b), is amended by striking out “paragraph (6)” and inserting lieu thereof "paragraphs (6) and (7)".

(3) NO ROLLOVER TO QUALIFIED PLAN OR ANNUITY FROM IRA TO WHICH SPOUSE MADE ROLLOVER CONTRIBUTION.-Subparagraph (B) of section 408(d)(3) is amended by adding at the end thereof the following: "Clause (ii) of subparagraph (A) shall not apply to any amount paid or distributed out of an individual retirement account or an individual retirement annuity to which an amount was contributed which was treated as a rollover contribution by section 402(a)(7) (or in the case of an individual retirement annuity, such section as made applicable by section 403(a)(4)(B)).” (4) EFFECTIVE DATE.-The amendments made by this subsection shall apply to lump-sum distributions completed after December 31, 1978, in taxable years ending after such date. (h) REMOVAL OF CERTAIN REQUIREMENTS.

(1) Disregard OF 5-YEAR MINIMUM PARTICIPATION RULE FOR PURPOSES OF ROLLOVERS.-Subclause (II) of section 402(a)(5)(D)(i) is amended by striking out "subsection (e)(4)(B)" and inserting in lieu thereof "subparagraphs (B) and (H) of subsection (e)(4)".

(2) REDUCTION OF REQUIRED PERIOD BETWEEN ROLLOVER CONTRIBUTIONS FROM 3 YEARS TO 1 YEAR.-The first sentence of subparagraph (B) of section 408(d)(3) is amended by striking out "3-year period" and inserting in lieu thereof "1-year period".

(3) EFFECTIVE DATE.

(A) IN GENERAL.-The amendments made by this section shall apply to payments made in taxable years beginning after December 31, 1977.

(B) TRANSITIONAL RULE.-In the case of any payment which is described in section 402(a)(5)(A) or 403(a)(4)(A) of the Internal Revenue Code of 1954 by reason of the amendments made by this section, the applicable period specified in section 402(a)(5)(C) of such Code (or in the case of an individual retirement annuity, such section as made applicable by section 403(a)(4)(B) of such Code) shall not expire before the close of December 31, 1978.

(i) WAIVER OF EXCISE TAX ON CERTAIN ACCUMULATIONS IN INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES.

(1) GENERAL RULE.-Section 4974 (relating to excise tax on certain accumulations in individual retirement accounts or annuities) is amended by adding at the end thereof the following new subsection:

"(c) WAIVER OF TAX IN CERTAIN CASES.-If the taxpayer establishes to the satisfaction of the Secretary that

"(1) the shortfall described in subsection (a) in the amount distributed during any taxable year was due to reasonable error, and

"(2) reasonable steps are being taken to remedy the shortfall,

the Secretary may waive the tax imposed by subsection (a) for the taxable year."

(2) EFFECTIVE DATE.-The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 1975. (j) REMOVAL OF CERTAIN LIMITATIONS ON PROVISION ALLOWING CORRECTION OF EXCESS CONTRIBUTIONS.

(1) GENERAL RULE.-The last sentence of section 4973(b) (defining excess contributions) is amended to read as follows: "For purposes of this subsection, any contribution which is distributed from the individual retirement account, individual retirement annuity, or bond in a distribution to which section 408(d)(4) applies shall be treated as an amount not contributed."

(2) EFFECTIVE DATE.-The amendment made by paragraph (1) shall apply to contributions made for taxable years beginning after December 31, 1977.

(k) SIMPLIFICATION OF RETURN REQUIREMENTS WITH RESPECT TO INDIVIDUAL RETIREMENT PLANS.—

(1) IN GENERAL.-Section 6058 (relating to information required in connection with certain plans of deferred compensation) is amended by redesignating subsection (d) as subsection (f) and by striking out subsection (c) and inserting in lieu thereof the following new subsections.

"(c) EMPLOYER.-For purposes of this section, the term 'employer' includes a person described in section 401(c)(4) and an individual who establishes an individual retirement plan.

"(d) COORDINATION WITH INCOME TAX RETURNS, ETC.-An individual who establishes an individual retirement plan shall not be required to file a return under this section with respect to such plan for any taxable year for which there is

"(1) no special IRP tax, and

"(2) no plan activity other than

"(A) the making of contributions (other than rollover contributions), and

"(B) the making of distributions.

"(e) SPECIAL IRP TAX DEFINED.-For purposes of this section, the term 'special IRP tax' means a tax imposed by

"(1) section 408(f),

"(2) section 409(c),

"(3) section 4973, or

"(4) section 4974.".

(2) INDIVIDUAL RETIREMENT PLAN DEFINED.-Subsection (a) of section 7701 (relating to definitions of general application throughout the Code) is amended by adding at the end thereof the following new paragraph:

"(37) INDIVIDUAL RETIREMENT PLAN.-The term 'individual retirement plan' means

“(A) an individual retirement account described in section 408(a),

"(B) an individual retirement annuity described in section 408(b), and

"(C) a retirement bond described in section 409."

(3) EFFECTIVE DATE.-The amendments made by paragraph (1) shall apply to returns for taxable years beginning after December 31, 1977. The amendment made by paragraph (2) shall apply to taxable years beginning after December 31, 1974.

Subtitle F-Other Individual Items

SEC. 161. CERTAIN GOVERNMENT SCHOLARSHIP AND AWARD PROGRAMS.

(a) GOVERNMENT HEALTH PROFESSION SCHOLARSHIP PROGRAMS.Subsection (c) of section 4 of the Act entitled "An Act to suspend until the close of June 30, 1975, the duty on certain carboxymethyl cellulose salts, and for other purposes" (Public Law 93-483; 88 Stat. 1457) approved October 26, 1974, is amended

(1) by striking out "1979" and inserting in lieu thereof "1980", and

(2) by striking out "1983" and inserting in lieu thereof "1984". (b) NATIONAL RESEARCH SERVICE AWARDS.

(1) GENERAL RULE.-Any amount paid to, or on behalf of, an individual from appropriated funds as a national research service award under section 472 of the Public Health Service Act shall be treated as a scholarship or fellowship grant under section 117 of the Internal Revenue Code of 1954.

(2) EFFECTIVE DATE.-The provisions of subsection (b) shall apply to awards made during calendar years 1974 through 1979. SEC. 162. CANCELLATION OF STUDENT LOANS.

Subsection (c) of section 2117 of the Tax Reform Act of 1976 (relating to cancellation of certain student loans) is amended by striking out "Janu- ary 1, 1979" and inserting in lieu thereof "January 1, 1983".

SEC. 163. TAX COUNSELING FOR THE ELDERLY.

(a) TRAINING AND TECHNICAL ASSISTANCE.—

(1) AGREEMENTS.-The Secretary, through the Internal Revenue Service, is authorized to enter into agreements with private or public nonprofit agencies or organizations for the purpose of providing training and technical assistance to prepare volunteers to provide tax counseling assistance for elderly individuals in the preparation of their Federal income tax returns.

(2) OTHER ASSISTANCE. In addition to any other forms of technical assistance provided under this section, the Secretary may provide

(A) preferential access to Internal Revenue Service taxpayer service representatives for the purpose of making available technical information needed during the course of the volunteers' work;

(B) material to be used in making elderly persons aware of the availability of assistance under volunteer taxpayer assistance programs under this section; and

(C) technical materials and publications to be used by such volunteers.

(b) POWERS OF THE SECRETARY.-In carrying out his responsibilities under this section, the Secretary is authorized

(1) to provide assistance to organizations which demonstrate, to the satisfaction of the Secretary, that their volunteers are adequately trained and competent to render effective tax counseling to the elderly;

(2) to provide for the training of such volunteers, and to assist in such training, to insure that such volunteers are qualified to provide tax counseling assistance to elderly individuals;

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