LUMP-SUM DISTRIBUTIONS FROM QUALIFIED PENSION, ETC., PLANS.

SEC. 1512. LUMP-SUM DISTRIBUTIONS FROM QUALIFIED PENSION, ETC., PLANS. (a) In General.— Section 402(e)(4) (relating to definitions and special rules) is amended by adding at the end thereof the following new subparagraph: “(L) Election to treat pre–1974 participation as post–1973 participation.— For purposes of subparagraph (E), subsection (a)(2), and section 403(a)(2), if a taxpayer elects (at the time and in the manner provided under regulations prescribed by the Secretary), all calendar years of an employee’s active participation in all plans in which the employee has been an active participant shall be considered years of active participation by such employee after December 31, 1973. An election made under this subparagraph, once made, shall be irrevocable and shall apply to all lumpsum distributions received by the taxpayer with respect to the employee. This subparagraph shall not apply if the taxpayer received a lumpsum distribution in a previous taxable year of the employee beginning after December 31, 1975, unless no portion of such lumpsum distribution was treated under subsection (a)(2) or section 403(a)(2) as gain from the sale or exchange of a capital asset held for more than 6 months.” (b) Effective Date.— The amendment made by this section shall apply to distributions and payments made after December 31, 1975, in taxable years beginning after such date.