OTHER PROVISIONS RELATING TO NONTAXABLE BENEFITS.

SEC. 204. OTHER PROVISIONS RELATING TO NONTAXABLE BENEFITS. (a) Dependent Care Assistance.— (1) In general.—Paragraph (1) of section 129(d) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) is amended by adding at the end thereof the following new sentence: “If any plan would qualify as a dependent care assistance program but for a failure to meet the requirements of this subsection, then, notwithstanding such failure, such plan shall be treated as a dependent care assistance program in the case of employees who are not highly compensated employees.” (2) Excluded employees.— (A) Section 129(d) is amended by adding at the end thereof the following new paragraph: “(9) Excluded employees.—For purposes of paragraphs (3) and (8), there shall be excluded from consideration— “(A) subject to rules similar to the rules of section 410(b)(4), employees who have not attained the age of 21 and completed 1 year of service (as defined in section 410(a)(3)), and “(B) employees not included in a dependent care assistance program who are included in a unit of employees covered by an agreement which the Secretary finds to be a collective bargaining agreement between employee representatives and 1 or more employees, if there is evidence that dependent care benefits were the subject of good faith bargaining between such employee representatives and such employer or employers.” (B) Section 129(d)(3) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) is amended by striking the last sentence. (3) Delay in application of benefits test.— (A) Paragraph (7) of section 129(d) (as in effect after the amendment made by paragraph (14) of section 1011B(a) of the Technical and Miscellaneous Revenue Act of 1988) is redesignated as paragraph (8). (B) Paragraph (1) of section 129(d) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) is amended by striking “paragraphs (2) through (7)” and inserting “paragraphs (2) through (8)”. (C) Section 129(e)96) is amended by striking “(7)” and inserting “(8)”. 103 STAT. 833 (D) Section 129(d)(8) (as redesignated by subparagraph (A)) shall apply to plan years beginning after December 31, 1989. (b) Line of Business Test.— (1) Application of line of business test for period before guidelines issued.—In the case of any plan year beginning on or before the date the Secretary of the Treasury or his delegate issues guidelines and begins issuing determinations under section 414(r)(2)(C) of the Internal Revenue Code of 1986, an employer shall be treated as operating separate lines of business if the employer reasonably determines that it meets the requirements of section 414(r) (other than paragraph (2)(C) thereof) of such Code. (2) Dependent care.—Paragraph (1) of section 414(r) is amended by striking “section 410(b)” and inserting “sections 129(d)(8) and 410(b)”. (c) Group-Term Life Insurance.—Paragraph (7) of section 505(b) (relating to $200,000 compensation limit) is amended by adding at the end thereof the following new sentence: “This paragraph shall not apply in determining whether the requirements of section 79(d) are met.” (d) Effective Dates.— (1) The amendments made by subsections (a)(1), (a)(2), and (b)(2) shall apply to years beginning after December 31, 1988. (2) The amendments made by subsection (a)(3) shall apply to plan years beginning after December 31, 1989. (3) The provisions of subsection (b)(1) shall apply to years beginning after December 31, 1986. (4) The amendment made by subsection (c) shall take effect as if included in the amendment made by section 1011B(a)(32) of the Technical and Miscellaneous Revenue Act of 1988.