PUBLIC LAW 104-188—AUG. 20, 1996
110 STAT. 1787
(f) EFFECTIVE DATE.— The amendments made by this section 26 USC 170 note.
shall apply to taxable years beginning after December 31, 1997.
SEC. 1317. EFFECTIVE DATE.
(a) IN GENERAL.—Except as otherwise provided in this subtitle, 26 USC 641 note.
the amendments made by this subtitle shall apply to taxable years
beginning after December 31, 1996.
(b) TREATMENT OF CERTAIN ELECTIONS UNDER PRIOR LAW.—
26 USC i362
For purposes of section 1362(g) of the Internal Revenue Code of note.
1986 (relating to election after termination), any termination under
section 1362(d) of such Code in a taxable year beginning before
January 1, 1997, shall not be taken into account.
Subtitle D—Pension Simplification
CHAPTER 1—SIMPLIFIED DISTRIBUTION RULES
SEC. 1401. REPEAL OF 5-YEAR INCOME AVERAGING FOR LUMP-SUM
DISTRIBUTIONS.
(a) IN GENERAL.— Subsection (d) of section 402 (relating to
taxability of beneficiary of employees' trust) is amended to read
as follows:
"(d) TAXABILITY OF BENEFICIARY OF CERTAIN FOREIGN SITUS
TRUSTS. — For purposes of subsections (a), (b), and (c), a stock bonus,
pension, or profit-sharing trust which would qualify for exemption
from tax under section 501(a) except for the fact that it is a
trust created or organized outside the United States shall be treated
as if it were a trust exempt from tax under section 501(a).".
(b) CONFORMING AMENDMENTS. —
(1) Subparagraph (D) of section 402(e)(4) (relating to other
rules applicable to exempt trusts) is amended to read as follows:
"(D) LUMP-SUM DISTRIBUTION.—For purposes of this
paragraph—
"(i) IN GENERAL.— The term lump-sum distribution'
means the distribution or payment within one taxable
year of the recipient of the balance to the credit of
an employee which becomes payable to the recipient—
"(I) on account of the employee's death,
"(II) after the employee attains age 59V2,
"(III) on account of the employee's separation
from service, or
"(IV) after the employee has become disabled
(within the meaning of section 72(m)(7)),
from a trust which forms a part of a plan described
in section 401(a) and which is exempt from tax under
section 501 or from a plan described in section 403(a).
Subclause (III) of this clause shall be applied only
with respect to an individual who is an employee without regard to section 401(c)(1), and subclause (IV) shall
be applied only with respect to an employee within
the meaning of section 401(c)(1). For purposes of this
clause, a distribution to two or more trusts shall be
treated as a distribution to one recipient. For purposes
of this paragraph, the balance to the credit of the
employee does not include the accumulated deductible
employee contributions under the plan (within the
meaning of section 72(o)(5)).
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