PUBLIC LAW 99-514—OCT. 22, 1986 if -fc.
tribution percentages beginning with the highest of such percentages). "(C)
"(D)
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METHOD OF DISTRIBUTING EXCESS CONTRIBUTIONS.—
Any distribution of the excess aggregate contributions for any plan year shall be made to highly compensated employees on the basis of the respective portions of such amounts attributable to each of such employees. Forfeitures of excess aggregate contributions may not be allocated to participants whose contributions are reduced under this paragraph.
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100 STAT. 2461
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COORDINATION WITH SUBSECTION (k)
AND 402(g).—
The determination of the amount of excess aggregate contributions with respect to a plan shall be made after— "(i) first determining the excess deferrals (within the meaning of section 402(g)), and "(ii) then determining the excess contributions under subsection (k). "(7) TREATMENT OF DISTRIBUTIONS.— "(A) ADDITIONAL TAX OF SECTION 72(t) NOT APPLICABLE.—
No tax shall be imposed under section 72(t) on any amount required to be distributed under paragraph (8). "(B) EXCLUSION OF EMPLOYEE CONTRIBUTIONS.—Any distribution attributable to employee contributions shall not be included in gross income except to the extent attributable to income on such contributions. "(8) HIGHLY COMPENSATED EMPLOYEE.—For purposes of this subsection, the term 'highly compensated employee' has the meaning given to such term by section 414(q). "(9) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection and subsection (k) including— "(A) such regulations as may be necessary to prevent the multiple use of the alternative limitation with respect to any highly compensated employee, and "(B) regulations permitting appropriate aggregation of plans and contributions. For purposes of the preceding sentence, the term 'alternative limitation' means the limitation of section 401(k)(3)(A)(ii)(II) and the limitation of paragraph (2)(A)(ii) of this subsection. "(10) CROSS REFERENCE.— "For excise tax on certain excess contributions, see section 4979." (b) EXCISE TAX ON EXCESS CONTRIBUTIONS.—
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(1) IN GENERAL.—Chapter 43 (relating to qualified pension, etc. plans) is amended by adding at the end thereof the following new section:
"SEC. 4979. TAX ON CERTAIN EXCESS CONTRIBUTIONS.
"(a) GENERAL RULE.—In the case of any plan, there is hereby imposed a tax for the taxable year equal to 10 percent of the sum of. "(1) any excess contributions under a cash or deferred f arrangement which is part of such plan for the plan year ending in such taxable year, and ^. "(2) any excess aggregate contributions under the plan for the plan year ending in such taxable year.
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