LIMITATION ON CONTRIBUTIONS TO SECTION 401(h) ACCOUNTS.

SEC. 7311. LIMITATION ON CONTRIBUTIONS TO SECTION 401(h) ACCOUNTS. (a) In General.—Section 401(h) is amended by adding at the end thereof the following new sentence: “In no event shall the requirements of paragraph (1) be treated as met if the aggregate actual contributions for medical benefits, when added to actual contributions for life insurance protection under the plan, exceed 25 percent of the total actual contributions to the plan (other than contributions to fund past service credits) after the date on which the account is established.” (b) Effective Date.— (1) In general.—The amendment made by this section shall apply to contributions after October 3, 1989. (2) Transition.—The amendment made by this section shall not apply to contributions made before January 1, 1990, if— (A) the employer requested before October 3, 1989, a private letter ruling or determination letter with respect to the qualification of the plan maintaining the account under section 401(h) of the Internal Revenue Code of 1986, (B) the request sets forth a method under which the amount of contributions to the account are to be determined on the basis of cost, (C) such method is permissible under section 401(h) of such Code under the provisions of General Counsel Memorandum 39785, and (D) the Internal Revenue Service issued before October 4, 1989, a private letter ruling, determination letter, or other letter providing that the specific plan involved qualifies 103 STAT. 2355under section 401(a) of such Code when such method is used, that contributions to the account are deductible, or acknowledging that the account would not adversely affect the qualified status of the plan (contingent on all phases of the particular plan being approved).