PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT PLANS.

SEC. 647. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT PLANS. (a) Section 403(b) Plans.—Subsection (b) of section 403 is amended by adding at the end the following new paragraph: “(13) Trustee-to-trustee transfers to purchase permissive service credit.—No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is— “(A) for the purchase of permissive service credit (as defined in section 415(n)(3)(A)) under such plan, or “(B) a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.”. (b) Section 457 Plans.—Subsection (e) of section 457, as amended by section 641, is amended by adding after paragraph (16) the following new paragraph: “(17) Trustee-to-trustee transfers to purchase permissive service credit.—No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is— “(A) for the purchase of permissive Service credit (as defined in section 415(n)(3)(A)) under such plan, or “(B) a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.”. (c) Effective Date.—The amendments made by this section shall apply to trustee-to-trustee transfers after December 31, 2001.