AMENDMENTS RELATED TO PARTS III AND IV OF SUBTITLE A OF TITLE XI OF THE REFORM ACT.

SEC. 1011A. AMENDMENTS RELATED TO PARTS III AND IV OF SUBTITLE A OF TITLE XI OF THE REFORM ACT. (a) Amendments Related to Section 1121 of the Reform Act.— (1) Subparagraph (F) of section 402(a)(5) of the 1986 Code (relating to transfer treated as rollover contribution under section 408) is amended by striking out “described in subparagraph (A)” and inserting in lieu thereof “resulting in any portion of a distribution being excluded from gross income under subparagraph (A)”. (2) (A) Section 408(d)(3)(A) is amended by striking out the last sentence thereof. (B) The amendment made by subparagraph (A) shall apply to rollover contributions made in taxable years beginning after December 31, 1986. (3) Section 1121(d) of the Reform Act is amended by adding at the end thereof the following new paragraph: “(5) Plans may incorporate section 401(a)(9) requirements by reference.—Notwithstanding any other provision of law, except as provided in regulations prescribed by the Secretary of the Treasury or his delegate, a plan may incorporate by reference the requirements of section 401(a)(9) of the Internal Revenue Code of 1986.” (4) Section 1121(d)(3) of the Reform Act is amended by striking out “plan years” and inserting in lieu thereof “years”. (5) Section 402(a)(5)(FXii) of the Internal Revenue Code of 1954 shall not apply to distributions after October 22, 1986, and before the 1st taxable year beginning after 1986 which are attributable to benefits which accrued before January 1, 1985. (b) Amendments Related to Section 1122 of the Reform Act.— (1) (A) Section 72(f) of the 1986 Code (relating to special rules for computing employees’ contributions) is amended by striking out “for purposes of subsections (d)(1) and (e)(7), the consideration for the contract contributed by the employee,”. (B) Section 72(n) of the 1986 Code (relating to annuities under retired serviceman’s family protection plan or survivor benefit plan) is amended by striking out “Subsections (b) and (d)” and inserting in lieu thereof “Subsection (b)”. (C) Sections 406(e) and 407(e) of the 1986 Code are each amended by striking out paragraph (1) and by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively. (2) (A) Section 72 of the 1986 Code (relating to annuities and certain proceeds of endowment and life insurance contracts) is 102 STAT. 3473amended by adding after subsection (c) the following new subsection: “(d) Treatment of Employee Contributions Under Defined Contribution Plans as Separate Contracts.—For purposes of this section, employee contributions (and any income allocable thereto) under a defined contribution plan may be treated as a separate contract.” (B) Section 72(e) of the 1986 Code is amended by striking out paragraph (9). (3) Section 414(k)(2) of the 1986 Code (relating to certain plans treated as defined contribution plans) is amended by inserting “72(d) (relating to treatment of employee contributions as separate contract),”, before “411(a)(7)(A)”. (4) (A) The amendment made by section 1122(e)(1) of the Reform Act is repealed and the Internal Revenue Code of 1986 shall be applied and administered as if such amendment had not been enacted. (B) Subclause (D of section 402(a)(5)(D)(i) of the 1986 Code is amended by inserting “is payable as provided in clause (i), (iii), or (iv) of subsection (e)(4)(A) (without regard to the second sentence thereof) and” after “such distribution” the first place it appears. (C) Section 402(a)(5)(D)(i) of the 1986 Code is amended by adding at the end thereof the following new sentence: “Any distribution described in section 401(a)(28)(B)(ii) shall be treated as meeting the requirements of subclauses (I) and (II).” (D) Section 402(a)(5)(D)(iii) is amended by striking out “10-year” in the heading. (E) Section 402(a)(5)(D)(i)(n) of the 1986 Code (as in effect after the amendment made by subparagraph (A)) shall not apply to distributions after December 31, 1986, and before March 31, 1988. (5) Clause (ii) of section 402(a)(6)(H) of the 1986 Code (relating to special rule for frozen deposits) is amended by adding at the end thereof the following new flush sentence: “A deposit shall not be treated as a frozen deposit unless on at least 1 day during the 60-day period described in paragraph (5)(C) (without regard to this subparagraph) such deposit is described in the preceding sentence.” (6) Clause (i) of section 402(e)(4)(B) of the 1986 Code is amended by striking out “taxpayer” and inserting in lieu thereof “employee”. (7) The last sentence of section 402(e)(4)(J) of the 1986 Code (relating to unrealized appreciation on employer securities) is amended to read as follows: “In accordance with rules prescribed by the Secretary, a taxpayer may elect, on the return of tax on which a distribution is required to be included, not to have this subparagraph apply with respect to such distribution.” (8) Section 402 of the 1986 Code (relating to taxability of beneficiary of employees’ trust) is amended as follows: (A) Subsection (a)(1) is amended by striking out “paragraphs (2) and (4)” and inserting in lieu thereof “paragraph (4)”. (B) Subsection (a)(4) is amended by striking out “or (2)”. 102 STAT. 3474 (C) Subsection (a)(6)(C) is amended by striking out “paragraph (2) of subsection (a), and”. (D) Subsection (a)(6)(E)(ii) is amended by striking out “paragraph (2) of subsection (a), and” and by striking out the comma after “subsection (e)”. (E) Subsection (e)(1)(A) is amended by striking out “ordinary income portion of a”. (F) Subsection (e)(4)(A) is amended— (i) by striking out “Except for purposes of subsection (a)(2) and section 403(a)(2), a” and inserting in lieu thereof “A”, and (ii) by striking out “subsection (a)(2) of this section, and subsection (a)(2) of section 403,”. (G) Subparagraph (L) of subsection (e)(4) is hereby re-pealed. (H) Subsection (e)(4)(M) is amended by striking out “, subsection (a)(2) of this section, and section 403(a)(2)”. (I) Subsection (e)(5) is amended by striking out “and paragraph (2) of subsection (a)”. (J) Subsection (e)(6)(C) is amended to read as follows: “(C) Special lump-sum treatment.—For purposes of this paragraph, special lump sum treatment applies to any distribution if any portion of such distribution is taxed under this subsection by reason of an election under paragraph (4)(B).” (9) (A) Section 72(e)(7) of the 1986 Code is hereby repealed. (B) Section 72(e)(5)(D) is amended by striking out “paragraphs (7) and (8)” and inserting in lieu thereof “paragraph (8)”. (C) Section 72(e)(8)(A) is amended by striking out “(other than paragraph (7))”. (D) Section 72(q)(2)(E) of the 1986 Code is amended by striking out “(determined without regard to subsection (e)(7))”. (10) Section 402(e)(1)(B) of the 1986 Code (relating to amount of tax on lump-sum distributions) is amended by adding at the end thereof the following new flush sentence: “For purposes of the preceding sentence, in determining the amount of tax under section 1(c), section 1(g) shall be applied without regard to paragraph (2)(B) thereof.” (11) Section 1122(h) of the Reform Act is amended by adding at the end thereof the following new paragraph: “(9) Special rule for state plans—In the case of a plan maintained by a State which on May 5, 1986, permitted withdrawal by the employee of employee contributions (other than as an annuity), section 72(e) of the Internal Revenue Code of 1986 shall be applied— “(A) without regard to the phrase ‘before separation from service’ in paragraph (8)(D), and “(B) by treating any amount received (other than as an annuity) before or with the 1st annuity payment as having been received before the annuity starting date.” (12) Subparagraph (B) of section 1122(h)(2) of the Reform Act is amended by inserting “, except that section 72(6)(3) of the Internal Revenue Code of 1986 (as added by such subsection) shall apply to individuals whose annuity starting date is after July 1, 1986” after “1986”. (13) Sections 1122 (h)(3)(C) and (h)(4)(C) of the Reform Act are each amended by striking out “with respect to any other lump 102 STAT. 3475sum distribution” and inserting in lieu thereof “for purposes of such Code”. (14) Clause (i) of section 1122(h)(3)(C) of the Reform Act is amended— (A) by striking out “individual” and inserting in lieu thereof “employee”, and (B) by inserting “or by an individual, estate, or trust with respect to such an employee” after “1986”. (15) Section 1122(h)(5) of the Reform Act is amended— (A) by striking out “individual” and inserting in lieu thereof “employee”, (B) by inserting “and by including in gross income the zero bracket amount in effect under section 63(d) of such Code for such years” after “1986” in the last sentence, and (C) by adding at the end thereof the following new sentence: “This paragraph shall also apply to an individual, estate, or trust which receives a distribution with respect to an employee described in this paragraph.” (16) Sections 406(c) and 407(c) of the 1986 Code are each amended— (A) by striking out “subsections (a)(2) and (e) of section 402, and section 403(a)(2)” and inserting in lieu thereof “section 402(e)”, and (B) by striking out “of Capital Gain Provisions and” in the heading thereof. (c) Amendments Related to Section 1123 of the Reform Act.— (1) Subparagraph (A) of section 72(t)(2) of the 1986 Code (relating to subsection not to apply to certain distributions) is amended by striking out “on account of early retirement under the plan” in clause (v). (2) Subparagraph (C) of section 72(t)(2) of the 1986 Code (relating to certain plans) is amended to read as follows: “(C) Exceptions for distributions from employee stock ownership plans.— Any distribution made before January 1, 1990, to an employee from an employee stock ownership plan (as defined in section 4975(e)(7)) or a tax credit employee stock ownership plan (as defined in section 409) if— “(i) such distribution is attributable to assets which have been invested in employer securities (within the meaning of section 409(1)) at all times during the 5-plan-year period preceding the plan year in which the distribution is made, and “(ii) at all times during such period the requirements of sections 401(a)(28) and 409 (as in effect at such times) are met with respect to such employer securities.” (3) Subparagraph (A) of section 72(t)(3) of the 1986 Code (relating to certain exceptions not to apply to individual retirement plans) is amended by striking out “and (C)” and inserting in lieu thereof “(C), and (D)”. (4) Subparagraphs (D) and (G) of section 72((j)(2) of the 1986 Code are each amended by striking out the period at the end thereof and inserting in lieu thereof a comma. (5) Subparagraph (B) of section 72((j)(3) of the 1986 Code (relating to change in substantially equal payments) is amended by striking out “employee” each place it appears and inserting in lieu thereof “taxpayer”. 102 STAT. 3476 (6) Section 72((j)(2) of the 1986 Code (relating to subsection not to apply to certain dispositions) is amended by inserting after subparagraph (G) the following new subparagraph: “(H) to which subsection (t) applies (without regard to paragraph (2) thereoO,”. (7) Subparagraph (D) of section 72((j)(2) and clause (iv) of section 72(t)(2)(A) of the 1986 Code are each amended by inserting “designated” before “beneficiary”. (8) Paragraph (2) of section 72(o) of the 1986 Code (relating to additional tax if amount received before age 59*4) is hereby repealed. (9) Subparagraph (I) of section 402(e)(4) of the 1986 Code is amended by striking out “clause (ii) of”. (10) Section 26(b)(2) of the 1986 Code is amended— (A) by striking out “, (o)(2),” in subparagraph (O, and (B) by striking out “408(f) (relating to additional tax on income from certain retirement accounts)” in subparagraph (D) and inserting in lieu thereof “72(t) (relating to 10-percent additional tax on early distributions from qualified retirement plans)”. (11) Section 1123(e)(2) of the Reform Act is amended— (A) by striking out “taxable”, and (B) by inserting “, but only with respect to distributions from contracts described in section 403(b) of the Internal Revenue Code of 1986 which are attributable to assets other than assets held as of the close of the last year beginning before January 1, 1989” after “1988”. (12) Section 1123(e) of the Reform Act is amended by adding at the end thereof the following new paragraph: “(5) Special rule for distributions under an annuity con-tract.— The amendments made by paragraphs (1), (2), and (3) of subsection (b) shall not apply to any distribution under an annuity contract if— “(A) as of March 1, 1986, payments were being made under such contract pursuant to a written election providing a specific schedule for the distribution of the taxpayer’s interest in such contract, and “(B) such distribution is made pursuant to such written election.” (13) Section 72(t) of the 1986 Code shall apply to any distribution without regard to whether such distribution is made with-out the consent of the participant pursuant to section 411(a)(11) or section 417(e) of the 1986 Code. (d) Amendments Related to Section 1124 of the Reform Act.— (1) Section 1124(a) of the Reform Act is amended to read as follows: “(a) In General.—If an employee dies, separates from service, or becomes disabled before 1987 and an individual, trust, or estate receives a lump-sum distribution with respect to such employee after December 31, 1986, and before March 16, 1987, on account of such death, separation from service, or disability, then, for purposes of the Internal Revenue Code of 1986, such individual, estate, or trust may treat such distribution as if it were received in 1986.” (2) Section 1124(b) of the Reform Act is amended— (A) by striking out “employee” each place it appears and inserting in lieu thereof “individual, estate, or trust”, and 102 STAT. 3477 (B) by inserting “with respect to an employee” after “receives”. (3) Section 1124 of the Reform Act is amended by adding at the end thereof the following new subsection: “(c) Lump Sum Distribution.—For purposes of this section, the term ‘lump sum distribution’ has the meaning given such term by section 402(e)(4)(A) of the Internal Revenue Code of 1986, without regard to subparagraph (B) or (H) of section 402(e)(4) of such Code.” (e) Amendments Related to Section 1131 of the Reform Act.— (1) Subsection (c) of section 4972 of the 1986 Code (defining nondeductible contributions) is amended to read as follows: “(c) Nondeductible Contributions.—For purposes of this section— “(1) In general.— The term ‘nondeductible contributions’ means, with respect to any qualified employer plan, the sum of— “(A) the excess (if any) of— “(i) the amount contributed for the taxable year by the employer to or under such plan, over “(ii) the amount allowable as a deduction under section 404 for such contributions (determined without regard to subsection (e) thereof), and “(B) the amount determined under this subsection for the preceding taxable year reduced by the sum of— “(i) the portion of the amount so determined re-turned to the employer during the taxable year, and “(ii) the portion of the amount so determined deductible under section 404 for the taxable year (determined without regard to subsection (e) thereof). “(2) Ordering rule for section 404.— For purposes of paragraph (1), the amount allowable as a deduction under section 404 for any taxable year shall be treated as— “(A) first from carryforwards to such taxable year from preceding taxable years (in order of time), and “(B) then from contributions made during such taxable year. “(3) Contributions which may be returned to employer.—In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account any contribution for such taxable year which is distributed to the employer in a distribution described in section 498(Xc)(2)(BXii) if such distribution is made on or before the last day on which a contribution may be made for such taxable year under section 404(a)(6). “(4) Pre-1987 contributions.—The term “nondeductible contribution” shall not include any contribution made for a taxable year beginning before January 1, 1987.”” (2) Paragraph (1) of section 4972(d) of the 1986 Code (defining qualified employer plan) is amended to read as follows: “(1) Qualified employer plan.— “(A) In general.— The term ‘qualified employer plan’ means— “(i) any plan meeting the requirements of section 401(a) which includes a trust exempt from tax under section 501(a), “(ii) an annuity plan described in section 403(a), and 102 STAT. 3478 “(iii) any simplified employee pension (within the meaning of section 408(k)). “(B) Exemption for governmental and tax exempt plans.—The term ‘qualified employer plan’ does not include a plan described in subparagraph (A) or (B) of section 4980(c)(1).” (3) Section 1131(d) of the Reform Act is amended to read as follows: “(d) Effective Dates.— “(1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1986. “(2) Special rules for collective bargaining agreements.— In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before March 1, 1986, the amendments made by this section shall not apply to contributions pursuant to any such agreement for taxable years beginning before the earlier of— “(A) January 1, 1989, or “(B) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after February 28, 1986).” (4) (A) Subparagraph (A) of section 404(a)(7) of the 1986 Code is amended— (i) by striking out “provisions” and inserting in lieu thereof “paragraphs”, and (ii) by inserting “or in connection with trusts or plans described in 2 or more of such paragraphs” after “1 or more defined benefit plans”. (B) Paragraph (3) of section 404(h) of the 1986 Code is amended to read as follows: (9) Coordination with subsection (a) (7).—For purposes of subsection (a)(7), a simplified employee pension shall be treated as if it were a separate stock bonus or profit-sharing trust.” (5) In the case of any taxable year beginning in 1987, the amount under section 4972(c)(1)(A)(ii) of the 1986 Code for a plan to which title IV of the Employee Retirement Income Security Act of 1974 applies shall be increased by the amount (if any) by which, as of the close of the plan year with or within which such taxable year begins— (A) the liabilities of such plan (determined as if the plan had terminated as of such time), exceed (B) the assets of such plan. (f) Amendments Related to Section 1132 of the Reform Act.— (1) Section 4980(c)(1)(A) of the 1986 Code (defining qualified plan) is amended by striking out “this subtitle” and inserting in lieu thereof “subtitle A”. (2) Section 4980(c)(3)(A) of the 1986 Code (relating to exception for employee stock ownership plans) is amended— (A) by inserting “or a tax credit employee stock ownership plan (as described in section 409)” after “section 4975(e)(7)”, and (B) by inserting “, except to the extent necessary to meet the requirements of section 401(a)(28),” after “must”. (3) Subparagraph (C) of section 4980(c)(3) of the 1986 Code is amended— 102 STAT. 3479 (A) by striking out “(by reason of the limitations of section 415)”, and (B) by adding at the end thereof the following new sentence: “The amount allocated in the year of transfer shall not be less than the lesser of the maximum amount allowable under section 415 or ⅛ of the amount attributable to the securities scQuired”. (4) Subparagraph (B) of section 1132(c)(2) of the Reform Act is amended by striking out “November 19, 1978” and inserting in lieu thereof “September 19, 1978”. (5) Section 1132(c) of the Reform Act is amended by adding at the end thereof the following new paragraph: “(5) Special rule for employee stock ownership plans.—Section 4980(c)(3) of the Internal Revenue Code of 1986 (as added by subsection (a)) shall apply to reversions occurring after March 31, 1985.” (6) Section 498O(c)(3) of the 1986 Code is amended by adding at the end thereof the following new subparagraphs: “(F) No credit or deduction allowed—No credit or deduction shall be allowed under chapter 1 for any amount transferred to an employee stock ownership plan in a trans-fer to which this paragraph applies. “(G) Amount transferred to include income thereon, etc.—The amount transferred shall not be treated as meeting the requirements of subparagraphs (B) and (O unless amounts attributable to such amount also meet such requirements.” (7) Section 4980(c)(3)(C) of the 1986 Code is amended by adding at the end thereof the following new sentence: “In the case of dividends on securities held in the suspense account, the requirements of this subparagraph are met only if the dividends are allocated to accounts of participants or paid to participants in proportion to their ac-counts, or used to repay loans used to purchase employer securities.” (g) Amendments Related to Section 1133 of the Reform Act.— (1) (A) Section 4981A of the 1986 Code (as added by section 1133 of the Reform Act) is redesignated as section 4980A. (B) The table of sections for chapter 43 of the 1986 Code is amended by redesignating section 4981A as section 4980A. (2) Paragraph (1) of section 4980A(c) of the 1986 Code (as redesignated by paragraph (1)) is amended by striking out “$112,500 (adjusted at the same time and in the same manner as under section 415(d))” and inserting in lieu thereof “the greater of— “(A) $150,000, or “(B) $112,500 (adjusted at the same time and in the same manner as under section 415(d)).” (3) Section 4980A(c)(2) of the 1986 Code (relating to exclusion of certain distributions), as redesignated by paragraph (1), is amended— (A) by striking out “employee’s” in subparagraph (O and inserting in lieu thereof “individual’s”, and (B) by adding after subparagraph (D) the following new subparagraphs: 102 STAT. 3480 “(E) Any retirement distribution with respect to an individual of an annuity contract the value of which is not includible in gross income at the time of the distribution (other than distributions under, or proceeds from the sale or exchange of, such contract). “(F) Any retirement distribution with respect to an individual of— “(i) excess deferrals (and income allocable thereto) under section 402(g)(2)(A)(ii), or “(ii) excess contributions (and income allocable there-to) under section 401(k)(8) or 408(d)(4) or excess aggregate contributions (and income allocable thereto) under section 401(m)(6).” (4) (A) Section 4980A of the 1986 Code, as redesignated by paragraph (1), is amended by adding at the end thereof the following new subsection: “(f) Exemption of Accrued Benefits in Excess of $562,500 on August 1, 1986.—For purposes of this section— “(1) In general.—If an election is made with respect to an eligible individual to have this subsection apply, the individual’s excess distributions and excess retirement accumulation shall be computed without regard to any distributions or interests attributable to the accrued benefit of the individual as of August 1, 1986. “(2) Reduction in amounts which may be received without tax.— If this subsection applies to any individual— “(A) Excess distributions.— Subsection (c)(1) shall be applied— “(i) without regard to subparagraph (A), and “(ii) by reducing (but not below zero) the amount determined under subparagraph (B) thereof by retirement distributions attributable (as determined under rules prescribed by the Secretary) to the individual’s accrued benefit as of August 1, 1986. “(B) Excess retirement accumulation.—The amount determined under subsection (d)(3)(B) (without regard to subsection (c)(1)(A)) with respect to such individual shall be reduced (but not below zero) by the present value of the individual’s accrued benefit as of August 1, 1986, which has not been distributed as of the date of death. “(3) Eligible individual.—For purposes of this subsection, the term ‘eligible individual’ means any individual if, on August 1, 1986, the present value of such individual’s interests in qualified employer plans and individual retirement plans exceeded $562,500. “(4) Certain amounts excluded—In determining an individual’s accrued benefit for purposes of this subsection, there shall not be taken into account any portion of the accrued benefit— “(A) payable to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)) if includible in income of the alternate payee, or “(B) attributable to the individual’s investment in the contract (as defined in section 72(f)), “(5) Election.—An election under paragraph (1) shall be made on an individual’s return of tax imposed by chapter 1 or 11 for a taxable year beginning before January 1, 1989.” 102 STAT. 3481 (B) Section 4980A(c) of the 1986 Code, as redesignated by paragraph (1), is amended by striking out paragraph (5). (5) Section 4980A(d) of the 1986 Code (relating to increase in estate tax if individual dies with excess accumulation), as re-designated by paragraph (1), is amended— (A) by striking out “section 2010” in paragraph (2) and inserting in lieu thereof “chapter 11”, and (B) by adding at the end thereof the following new paragraphs: “(4) Rules for computing excess retirement accumulation.—The excess retirement accumulation of an individual shall be computed without regard to— “(A) any community property law, “(B) the value of— “(i) amounts payable to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p) if includible in income of the alternate payee, and “(ii) the individual’s investment in the contract (as defined in section 72(f)), and “(C) the excess (if any) of— “(i) any interests which are payable immediately after death, over “(ii) the value of such interests immediately before death. “(5) Election by spouse to have excess distribution rule apply.— “(A) In general.— If the spouse of an individual is the beneficiary of all of the interests described in paragraph (3)(A), the spouse may elect— “(i) not to have this subsection apply, and “(ii) to have this section apply to such interests and any retirement distribution attributable to such interests as if such interests were the spouse’s. “(B) De minimis exception.—If 1 or more persons other than the spouse are beneficiaries of a de minimis portion of the interests described in paragraph (3)(A)— “(i) the spouse shall not be treated as failing to meet the requirements of subparagraph (A), and “(ii) if the spouse makes the election under subparagraph (A), this section shall not apply to such portion or any retirement distribution attributable to such portion.” (6) Subparagraph (B) of section 4980A(d)(3) of the 1986 Code, as redesignated by paragraph (1), is amended to read as follows: “(B) the present value (as determined under rules prescribed by the Secretary as of the valuation date prescribed in subparagraph (A)) of a single life annuity with annual payments equal to the limitation of subsection (c) (as in effect for the year in which death occurs and as if the individual had not died).” (7) Section 2013 of the 1986 Code (relating to credit for tax on prior transfer) is amended by adding at the end thereof the following new subsection: “(g) Treatment of Additional Tax Under Section 4980A.—For purposes of this section, the estate tax paid shall not include any portion of such tax attributable to section 4980A(d).” 102 STAT. 3482 (8) Paragraph (1) of section 1133(c) of the Reform Act is amended by inserting “, other than a distribution with respect to a decedent dying before January 1, 1987” after “1986”. (9) Section 4980A(d)(3)(A) of the 1986 Code is amended by inserting “(other than as a beneficiary, determined after application of paragraph (5))” after “the individual’s interests”. (10) Section 691(c)(1) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: “(C) Excess retirement accumulation tax.—For purposes of this subsection, no deduction shall be allowed for the portion of the estate tax attributable to the increase in such tax under section 4980A(d).” (11) Section 2053(c)(1)(B) of the 1986 Code is amended by adding at the end thereof the following new sentence: “This subparagraph shall not apply to any increase in the tax imposed by this chapter by reason of section 4980A(d).” (12) Section 6018(a) of the 1986 Code is amended by adding at the end thereof the following new paragraph: (5) Return required if excess retirement accumulation tax.—The executor shall make a return with respect to the estate tax imposed by subtitle B in any case where such tax is increased by reason of section 4980Aid).” (h) Amendments Related to Section 1134 of the Reform Act.— (1) Section 72(p)(3)(A) of the 1986 Code (relating to denial of interest deductions in certain cases) is amended by inserting “to which paragraph (1) does not apply by reason of paragraph (2) during the period” after “loan”. (2) Subparagraph (B) of section 72(p)(3) of the 1986 Code is amended to read as follows: “(B) Period to which subparagraph (a) applies.— For purposes of subparagraph (A), the period described in this subparagraph is the period— “(i) on or after the 1st day on which the individual to whom the loan is made is a key employee (as defined in section 416(D), or “(ii) such loan is secured by amounts attributable to elective deferrals described in subparagraph (A) or (O of section 402(g)(3).” (i) Amendments Related to Section 1135 of the Reform Act.— (1) Subparagraph (A) of section 72(u)(1) of the 1986 Code (relating to annuity contracts not held by natural persons) is amended by inserting “(other than subchapter D” after “subtitle”. (2) Subparagraph (D) of section 72(u)(3) of the 1986 Code (relating to exceptions) is amended by striking out “until such time as the employee separates from service” and inserting in lieu thereof “until all amounts under such contract are distributed to the employee for whom such contract was purchased or the employee’s beneficiary”. (3) Subparagraphs (D) and (E) of section 72(u)(3) of the 1986 Code (relating to exceptions) are each amended by striking out “which”. (4) Paragraph (4) of section 72(u) of the 1986 Code is amended by striking out “and” at the end of subparagraph (A), by striking out the period at the end of subparagraph (B) and inserting in lieu thereof “, and”, and by adding at the end thereof the following new subparagraph: 102 STAT. 3483 “(C) which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period.” (j) Amendments Related to Section 1136 of the Reform Act.— (1) Section 401(a)(27) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: “(B) Plan must designate type.—In the case of a plan which is intended to be a money purchase pension plan or a profit-sharing plan, a trust forming part of such plan shall not constitute a qualified trust under this subsection unless the plan designates such intent at such time and in such manner as the Secretary may prescribe.” (2) Section 401(a)(27) of the 1986 Code is amended by striking out “(27)” and inserting in lieu thereof: “(27) Determinations as to profit-sharing plans.— “(A) Contributions need not be based on profits.—”. (k) Amendment Related to Section 1139 of the Reform Act.—Clause (i) of section 1139(d)(2)(A) of the Reform Act is amended by striking out “before January” and inserting in lieu thereof “after January”. (l) Amendment Related to Section 1145 of the Reform Act.—Subparagraph ® of section 401(a)(11) of the 1986 Code (relating to cross reference) is redesignated as subparagraph (F). (m) Amendments Related to Section 1147 of the Reform Act.— (1) Subparagraph (C) of section 7701(j)(1) of the 1986 Code (relating to tax treatment of Federal Thrift Savings Fund) is amended by inserting “, section 401(k)(4)(B),” after “paragraph (2)”. (2) Section 8440(a)(3) of title 5, United States Code, is amended by inserting “, 401(k)(4)(B) of such Code,” after “subsection (b)”.