100 STAT. 2942
PUBLIC LAW 99-514—OCT. 22, 1986
(B) AMENDMENT OF ERISA.—Paragraph (3) of section 203(c) of the Employee Retirement Income Security Act of 1974 is amended to read as follows: "(3)(A) The requirements of subsection (a)(2) shall be treated as satisfied in the case of a class-year plan if such plan provides that 100 percent of each employee's right to or derived from the contributions of the employer on the employee's behalf with respect to any plan year is nonforfeitable not later than when such participant was performing services for the employer as of the close of each of 5 plan years (whether or not consecutive) after the plan year for which the contributions were made. "(B) For purposes of subparagraph (A) if— "(i) any contributions are made on behalf of a participant with respect to any plan year, and "(ii) before such participant meets the requirements of subparagraph (A), such participant was not performing services for the employer as of the close of each of any 5 consecutive plan years after such plan year, then the plan may provide that the participant forfeits any right to or derived from the contributions made with respect to such plan year. "(C) For purposes of this part, the term 'class year plan' means a profit-sharing, stock bonus, or money purchase plan which provides for the separate nonforfeitability of employees' rights to or derived from the contributions for each plan year." (C) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to contributions made for plan years beginning after the date of the enactment of this Act; except that, in the case of a plan described in section 302(b) of the Retirement Equity Act of 1984, such amendments shall not apply to any plan year to which the amendments made by such Act do not apply by reason of such section 302(b). (2) RULES RELATING TO LUMP SUM TREATMENT.—Subsection (e)
of section 402 (relating to tax on lump sum distributions) is amended by adding at the end thereof the following new paragraph: "(6) TREATMENT OF POTENTIAL FUTURE VESTING.—
"(A) IN GENERAL.—For purposes of determining whether any distribution which becomes payable to the recipient on account of the employee's separation from service is a lump sum distribution, the balance to the credit of the employee shall be determined without regard to any increase in vesting which may occur if the employee is re-employed by the employer. "(B) RECAPTURE IN CERTAIN CASES.—If—
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"(i) an amount is treated as a lump sum distribution by reason of subparagraph (A), "(ii) special lump sum treatment applies to such distribution, "(iii) the employee is subsequently re-employed by the employer; and "(iv) as a result of services performed after being so re-employed, there is an increase in the employee's vesting for benefits accrued before the separation referred to in subparagraph (A),
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