CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457 PLAN BENEFITS UPON DIVORCE.

SEC. 635. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457 PLAN BENEFITS UPON DIVORCE. (a) In general.—Section 414(p)(11) (relating to application of rules to governmental and church plans ) is amended— (1) by inserting “or an eligible deferred compensation plan (within the meaning of section 457(b))” after “subsection (e))”; and (2) in the heading, by striking “governmental and church plans” and inserting “certain other plans”. (b) Waiver of Certain Distribution Requirements.—Paragraph (10) of section 414(p) is amended by striking “and section 409(d)” and inserting “section 409(d), and section 457(d)”. (c) Tax Treatment of Payments From a Section 457 Plan.—Subsection (p) of section 414 is amended by redesignating paragraph (12) as paragraph (13) and inserting after paragraph (11) the following new paragraph; “(12) Tax treatment of payments from a section 457 plan.—If a distribution or payment from an eligible deferred compensation plan described in section 457(b) is made pursuant to a qualified domestic relations order, rules similar to the rules of section 402(e)(1)(A) shall apply to such distribution or payment.”. (d) Effective Date.—The amendment made by this section shall apply to transfers, distributions, and payments made after December 31, 2001.