DEDUCTION LIMITS.

SEC. 616. DEDUCTION LIMITS. (a) Modification of Limits.— (1) Stock bonus and profit sharing trusts.— (A) In general.—Subclause (I) of section 404(a)(3)(A)(i) (relating to stock bonus and profit sharing trusts) is amended by striking “15 percent” and inserting “25 percent”. (B) Conforming amendment.—Subparagraph (C) of section 404(h)(1) is amended by striking “15 percent” each place it appears and inserting “25 percent”. (2) Defined contribution plans.—115 STAT. 103 A In general.—Clause (v) of section 404(a)(3)(A) (relating to stock bonus and profit sharing trusts) is amended to read as follows: “(v) Defined contribution plans subject to the funding standards.—Except as provided by the Secretary, a defined contribution plan which is subject to the funding standards of section 412 shall be treated in the same manner as a stock bonus or profit-sharing plan for purposes of this subparagraph.”. (B) Conforming amendments.— (i) Section 404(a)(1)(A) is amended by inserting “(other than a trust to which paragraph (3) applies)” after “pension trust”. (ii) Section 404(h)(2) is amended by striking “stock bonus or profit-sharing trust” and inserting “trust subject to subsection (a)(3)(A)”. (iii) The heading of section 404(h)(2) is amended by striking “stock bonus and profit-sharing trust” and inserting “certain trusts”. (b) Compensation.— (1) In general.—Section 404(a) (relating to general rule) is amended by adding at the end the following: “(12) Definition of compensation.—For purposes of paragraphs (3), (7), (8), and (9), the term ‘compensation’ shall include amounts treated as ‘participant’s compensation’ under subparagraph (C) or (D) of section 415(c)(3).”. (2) Conforming amendments.— (A) Subparagraph (B) of section 404(a)(3) is amended by striking the last sentence thereof. (B) Clause (i) of section 4972(c)(6)(B) is amended by striking “(within the meaning of section 404(a))” and inserting “(within the meaning of section 404(a) and as adjusted under section 404(a)(12))”. (c) Effective Date.—The amendments made by this section shall apply to years beginning after December 31, 2001.