RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

SEC. 646. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS. (a) Modification of Same Desk Exception.— (1) Section 401(k).— (A) Section 401(k)(2)(B)(i)(I) (relating to qualified cash or deferred arrangements) is amended by striking “separation from service” and inserting “severance from employment”. (B) Subparagraph (A) of section 401(k)(10) (relating to distributions upon termination of plan or disposition of assets or Subsidiary) is amended to read as follows: “(A) In general.—An event described in this subparagraph is the termination of the plan without establishment or maintenance of another defined contribution plan (other than an employee stock ownership plan as defined in section 4975(e)(7)).”. (C) Section 401(k)(10) is amended— (i) in subparagraph (B)— (I) by striking “An event” in clause (i) and inserting “A termination”; and (II) by striking “the event” in clause (i) and inserting “the termination”; (ii) by striking subparagraph (C); and (iii) by striking “or disposition of assets or subsidiary” in the heading. (2) Section 463(b).— (A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are each amended by striking “separates from service” and inserting “has a severance from employment”. (B) The heading for paragraph (11) of section 403(b) is amended by striking “separation from service” and inserting “severance from employment”. (3) Section 457.—Clause (ii) of section 457(d)(1)(A) is amended by striking “is separated from service” and inserting “has a severance from employment”. (b) Effective Date.—The amendments made by this section shall apply to distributions after December 31, 2001.115 STAT. 127