PUBLIC LAW 100-647—NOV. 10,1988

102 STAT. 3463

that the requirements of subparagraph (AXiii) have
been met with respect to such contributions."

(5) Section 408(d) of the 1986 Code (relating to tax treatment
of distributions) is amended by adding at the end thereof the
following new paragraph:

"(7) SPECIAL RULES FOE SIMPLIFIED EMPLOYEE PENSIONS.—

"(A) TRANSFER OR ROLLOVER OF CONTRIBUTIONS PROHIBITED
UNTIL DEFERRAL TEST MET.—Notwithstanding any other
provision of this subsection or section 72(t), paragraph (1)
and section 72(tXD shall apply to the transfer or distribu-
tion from a simplified employee pension of any contribution
under a salary reduction arrangement described in subsec-
tion (kX6) (or any income allocable thereto) before a deter-
mination as to whether the requirements of subsection
(kX6XAXiii) are met with respect to such contribution.

"(B) CERTAIN EXCLUSIONS TREATED AS DEDUCTIONS.—For
purposes of paragraphs (4) and (5) and section 4973, any
amount excludable or excluded from gross income under
section 402(h) shall be treated as an amount allowable or
allowed as a deduction under section 219."

(6) Subparagraph (O of section 404(hXD of the 1986 Code is
amended by inserting "(or during the taxable year in the case of
a taxable year described in subparagraph (AXii))" after "taxable
year" the second place it appears.

(7) Section 1108(h) of the Reform Act is amended to read as 26 USC 219 note.
follows:

"(h) EFFECTIVE DATES.-—

"(1) IN GENEEAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to years begin
ning after December 31,1986.

"(2) INTEGRATION RUIJES.—Subparagraphs (D) and (E) of sec-
tion 408(kX3) of the Internal Revenue Code of 1954 (as in effect
before the amendments made by this section) shall continue to
apply for years beginning after December 31, 1986, and before
January 1, 1989, except that employer contributions under an
arrangement under section 408(kX6) of the Internal Revenue
Code of 1986 (as added by this section) may not be integrated
under such subparagraphs."

(8) Section 209(eX8) of the Social Security Act is amended to 42 USC 409.
read as follows:

"(8) under a simplified employee pension (as defined in section
408(kXl) of such Code), other than any contributions described
in section 408(kX6) of such Code/'.

(9) Section 3401(aX12XO of the 1986 Code is amended—

(A) by striking out "section 219" and inserting in lieu
thereof "section 402(h) (1) and (2)", and

(B) by striking put "a deduction" and inserting in lieu
thereof "an exclusion".

(10) Section 408(kX8) of the 1986 Code is amended by inserting
", except that in the case of years beginning after 1988, the
$200,000 amount (as so adjusted) shall not exceed the amount in
effect under section 401(aXW after "section 415(d)".

(g) AMHSTDMENTS RELATED TO SECTION 1111 OF THE REFORM ACT.—
(1XA) Section 401(1X2X8) of the 1986 Code (defining contribu-
tion percentages) is amended by inserting "by the employer"
after "contributed" each place it appears.