MODIFICATION OF 10-PERCENT TAX FOR NONDEDUCTIBLE CONTRIBUTIONS.

SEC. 1507. MODIFICATION OF 10-PERCENT TAX FOR NONDEDUCTIBLE CONTRIBUTIONS. (a) In General.—Section 4972(c)(6)(B) (relating to exceptions) is amended to read as follows: “(B) so much of the contributions to 1 or more defined contribution plans which are not deductible when contributed solely because of section 404(a)(7) as does not exceed the greater of— “(i) the amount of contributions not in excess of 6 percent of compensation (within the meaning of section 404(a)) paid or accrued (during the taxable year for which the contributions were made) to beneficiaries under the plans, or “(ii) the sum of— “(I) the amount of contributions described in section 401(m)(4)(A), plus “(II) the amount of contributions described in section 402(g)(3)(A).”. (b) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 1997.