REINSTATEMENT OF PRE-1986 ACT NONDISCRIMINATION RULES.

SEC. 203. REINSTATEMENT OF PRE-1986 ACT NONDISCRIMINATION RULES. (a) In General.— (1) Each provision of law amended by subsection (b), (c), (d)(1), or (g) of section 1151 of the Tax Reform Act of 1986 is amended to read as if the amendments made by such subsection had not been enacted. (2) Each provision of law amended by paragraph (22), (27), or (31) of section 1011B(a) of the Technical and Miscellaneous Revenue Act of 1988 is amended to read as if the amendments made by such paragraph had not been enacted. (3) Subparagraph (A) of section 125(g)(3) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) is amended by striking “subparagraph (B) of section 410(b)(1)“ and inserting “section 410(b)(2)(A)(i)”. (4) Section 162(1)(2) is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B). (5) Subparagraph (C) of section 401(a)(9) is amended— (A) by striking “(as defined in section 89(i)(4))”, and (B) by adding at the end the following: “For purposes of this subparagraph, the term ‘church plan’ means a plan 103 STAT. 831maintained by a church for church employees, and the term ‘church’ means any church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)).” (6) (A) Subparagraph (C) of section 414(n)(3) is amended by striking “89,”. (B) Paragraph (1) of section 414(r) is amended by striking “sections 89 and” and inserting “section”. (C) Paragraph (2) of section 414(t) is amended by striking “89,”. (7) Sections 3021(c) and 6070 of the Technical and Miscellaneous “Revenue Act of 1988 are hereby repealed. (b) Exceptions.— (1)(A) Paragraph (7) of section 79(d) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) is amended to read as follows: “(7) Exemption for church plans.— “(A) In general.—This subsection shall not apply to a church plan maintained for church employees. “(B) Definitions.—For purposes of subparagraph (A), the terms ‘church plan’ and ‘church employee’ have the meaning given such terms by paragraphs (1) and (3)(B) of section 414(e), respectively, except that— “(i) section 414(e) shall be applied by substituting )‘section 501(c)(3)’ for ‘section 501’ each place it appears, and “(ii) the term ‘church employee’ shall not include an employee of— “(I) an organization described in section 170(b)(1)(A)(ii) above the secondary school level (other than a school for religious training), “(II) an organization described in section 170(b)(1)(A)(iii), and “(III) an organization described in section 501(c)(3), the basis of the exemption for which is substantially similar to the basis for exemption of an organization described in subclause (II).” (2) Paragraph (2) of section 125(d) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) is amended to read as follows: “(2) Deferred compensation plans excluded.— “(A) In general.—The term ‘cafeteria plan’ does not include any plan which provides for deferred compensation. “(B) Exception for cash and deferred arrangements.—Subparagraph (A) shall not apply to a profit-sharing or stock bonus plan or rural cooperative plan (within the meaning of section 401(k)(7)) which includes a qualified cash or deferred arrangement (as defined in section 401(k)(2)) to the extent of amounts which a covered employee may elect to have the employer pay as contributions to a trust under such plan on behalf of the employee. “(C) Exception for certain plans maintained by educational institutions.—Subparagraph (A) shall not apply to a plan maintained by an educational organization described in section 170(b)(1)(A)(ii) to the extent of amounts which a covered employee may elect to have the employer 103 STAT. 832pay as contributions for post-retirement group life insurance if— “(i) all contributions for such insurance must be made before retirement, and “(ii) such life insurance does not have a cash surrender value at any time. For purposes of section 79, any life insurance described in the preceding sentence shall be treated as group-term life insurance.” (c) Effective Date.—The amendments made by this section shall take effect as if included in section 1151 of the Tax Reform Act of 1986.