PUBLIC LAW 100-647— NOV. 10, 1988 102 STAT. 3487

"(6) CERTAIN PLANS MAINTAINED BY EDUCATIONAL INSTITU-
TIONS. — If an educational organization described in section
170(bXlXAXii) of the Internal Revenue Code of 1986 makes an
election under this paragraph with respect to a plan described
in section 125(cX2XC) of such Code, the amendments made by
this section shall apply with respect to such plan for plan years
beginning after the date of the enactment of this Act.

(27XA) Section 4976 of the 1986 Code is amended by re-
designating subsection (c) as subsection (d) and by inserting
after subsection (b) the following new subsection:
"(c) TAX ON FUNDED WELFARE BENEFIT FUNDS WHICH INCLUDE
DISCRIMINATORY EMPLOYEE BENEFIT PLAN. —

"(1) IN GENERAL.— If—

"(A) an employer maintains a welfare benefit fund, and
"(B) a discriminatory employee benefit plan (within the
meaning of section 89) is part of such fund for any plan
year,

there is hereby imposed on such employer for the taxable year
with or within which the plan year ends a tax in the amount
determined under paragraph (2).

"(2) AMOUNT OF TAX.— The amount of the tax under para-
graph (1) shall be equal to the excess (if any) of—

"(A) the product of the highest rate of tax imposed by
section 11, multiplied by the lesser of—

"(i) the aggregate excess benefits (as defined in sec-
tion 89) for such plan year, or

"(ii) the taxable income of the fund for such plan
year, over

"(B) the amount of tax imposed by chapter 1 on such fund
for such plan year."

(B) Section 4976(b) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:

"(5) LIMITATION IN CASE OF BENEFITS TO WHICH SECTION 89
APPLIES. — If section 89 applies to any post-retirement medical
benefit or life insurance benefit provided by a fund, the amount
of the disqualified benefit under paragraph (1XB) with respect to
such benefit shall not exceed the aggregate excess benefits
provided by the plan (as determined under section 89)."

(C) Section 505(aXD of the 1986 Code is amended by adding at
the end thereof the following new subsection: "This paragraph
shall not apply to any oiganization by reason of a failure to
meet the requirements of subsection (b) with respect to a benefit
to which section 89 applies/'

(28) Section 89(hX4) of the 1986 Code is amended by striking
out "subsection (hX5)" and inserting in lieu thereof "subsection

(29) Section of the 1986 Code is amended by striking
out the last sentence and inserting in lieu thereof the following
new sentences:

"Such inclusion shall be coordinated (under regulations pre-
scribed by the Secretary) with any inclusion under subsection
(a) with respect to such plan. In the case of a statutory employee
benefit plan described in subsection (iXIXB), any amount re-
quired to be included in gross income under this subsection
shall be included in the gross income of the beneficiary."

(30) Section 129(dXlXB) of the 1986 Code is amended by strik-
ing out "(6)" and inserting in lieu thereof "(7)".