SEGREGATED ASSET ACCOUNTS.

SEC. 1505. SEGREGATED ASSET ACCOUNTS. (a) Segregated Asset Accounts of Life Insurance Companies.— Paragraph (1)(B) of section 801 (g) is amended— (1) by striking out clause (ii) and inserting in lieu thereof the following: “(ii) which is described in subparagraph (A), (B), (C), (D),or (E) of section 805(d)(1)(other than a life, health or accident, property, casualty, or liability insurance contract) or which provides for the payment of annuities, and”, and (2) by striking out “as annuities” in clause (iii) and inserting in lieu thereof “out”. (b) Conforming Amendment.—Section 401 (relating to qualified pension, etc-plans) is amended by striking out subsection (f) and inserting in lieu thereof the following: “(f) Certain Custodial Accounts and Contracts.— For purposes of this title, a custodial account, an annuity contract, or a contract (other than a life, health or accident, property, casualty, or liability insurance contract) issued by an insurance company qualified to do 90 STAT. 1739business in a State shall be treated as a qualified trust under this section if— “(1) the custodial account or 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, that the manner in which be 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 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.”. (c) Effective Date.— The amendments made by this section apply for taxable years beginning after December 31, 1975.