CERTAIN ARMED FORCES SURVIVOR ANNUITIES.

SEC. 2008. CERTAIN ARMED FORCES SURVIVOR ANNUITIES. (a) Treatment of Certain Participants in the Plan.—Section 404(c) (relating to certain negotiated plans) is amended by inserting 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—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 thereof “or pensions”. (2) The last sentence of section 404(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.