P U B L I C L A W 9 9 - 5 1 4 — O C T. 22, 1986
100 S T A T. 2473
medical care (determined without regard to w h e the r the employee itemizes deductions for such taxable year). "(C) CERTAIN PLANS.—
^ ^.'i;
"(i) IN GENERAL.—Except as provided in clause (ii), any distribution m a d e before January 1, 1990, to a n employee from a n employee stock ownership plan defined in section 4975(e)(7) to the e x t e n t that, on average, a majority of assets in the plan h a v e been invested in employer securities (as defined in section 409(1)) for the 5-plan-year period preceding the plan year in which the distribution is made. "(ii) B E N E F I T S DISTRIBUTED MUST BE INVESTED I N EM-
PLOYER SECURITIES FOR 5 YEARS.—Clause (i) shall not apply to any distribution which is a t t r i b u t a b l e to assets which have not been invested in employer securities a t all times during the period referred to in clause (i). "(D) P A Y M E N T S TO ALTERNATE PAYEES PURSUANT TO QUALI-
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FiED DOMESTIC RELATIONS ORDERS.—Any distribution to a n a l t e r n a t e payee pursuant to a qualified domestic relations order (within the m e a n i n g of section 414(p)(l)). "(3) LIMITATIONS.— "(A)
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CERTAIN EXCEPTIONS NOT TO APPLY TO INDIVIDUAL
RETIREMENT P L A N S. — Subparagraph s (A)(v), (B), and (C) of
paragraph (2) shall not apply to distributions from individual retirement plan. "(B)
an
PERIODIC PAYMENTS UNDER QUALIFIED PLANS MUST
BEGIN AFTER SEPARATION.—Paragraph (2)(A)(iv) shall not apply to any a m o u n t paid from a t r u s t described in section 401(a) which is exempt from tax under section 501(a) or from a contract described in section 72(e)(5)(D)(ii) unless the series of payments begins after the employee s e p a r a t e s from service. "(4) C H A N G E I N SUBSTANTIALLY EQUAL PAYMENTS.— "(A) IN GENERAL.—If—
"(i) paragraph (1) does not apply to a distribution by reason of paragraph (2)(A)(iv), and "(ii) the series of payments under such paragraph a r e subsequently modified (other than by reason of death or disability)— , "(I) before the close of the 5-year period begin • • ning with the date of the first payment and after the employee a t t a i n s age 59 y2, or "(II) before the employee a t t a i n s age 59 V2, the tax p a y e r ' s tax for the 1st taxable year in which such modification occurs shall be increased by a n a m o u n t, determined under regulations, equal to the tax which (but for paragraph (2)(A)(iv)) would have been imposed, plus interest for the deferral period. "(B) DEFERRAL PERIOD.—For purposes of this paragraph, the term 'deferral period' means the period beginning w i t h the taxable year in which (without regard to paragraph (2)(A)(iv)) the distribution would h a v e been includible in gross income and ending with the taxable year in which the modification described in subparagraph (A) occurs. "(5) EMPLOYEE.—For purposes of this subsection, the term 'employee' includes any participant, and in the case of a n
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