110 STAT. 1796 PUBLIC LAW 104-188—AUG. 20, 1996 "(1) IN GENERAL.—Employer contributions to a simple retirement account shall be treated as if they are made to a plan subject to the requirements of this section. " (2) TIMING. — "(A) DEDUCTION. —Contributions described in paragraph (1) shall be deductible in the taxable year of the employer with or within which the calendar year for which the contributions were made ends. "(B) CONTRIBUTIONS AFTER END OF YEAR.— For purposes of this subsection, contributions shall be treated as made for a taxable year if they are made on account of the taxable year and are made not later than the time prescribed by law for filing the return for the taxable year (including extensions thereof).". (3) CONTRIBUTIONS AND DISTRIBUTIONS. — (A) Section 402 (relating to taxability of beneficiary of employees' trust) is amended by adding at the end the following new subsection: "(k) TREATMENT OF SIMPLE RETIREMENT ACCOUNTS.— Rules similar to the rules of paragraphs (1) and (3) of subsection (h) shall apply to contributions and distributions with respect to a simple retirement account under section 408(p).". (B) Section 408(d)(3) is amended by adding at the end the following new subparagraph: "(G) SIMPLE RETIREMENT ACCOUNTS.—T h is paragraph shall not apply to any amount paid or distributed out of a simple retirement account (as defined in subsection (p)) unless— "(i) it is paid into another simple retirement account, or "(ii) in the case of any payment or distribution to which section 72(t)(6) does not apply, it is paid into an individual retirement plan.". (C) Clause (i) of section 457(c)(2)(B) is amended by striking "section 402(h)(1)(B)" and inserting "section 402 (h)(1)(B) or (k)". (4) PENALTIES. — (A) EARLY WITHDRAWALS. —Section 72(t) (relating to additional tax in early distributions) is amended by adding at the end the following new paragraph: "(6) SPECIAL RULES FOR SIMPLE RETIREMENT ACCOUNTS. — In the case of any amount received from a simple retirement account (within the meaning of section 408(p)) during the 2- year period beginning on the date such individual first participated in any qualified salary reduction arrangement maintained by the individual's employer under section 408(p)(2), paragraph (1) shall be applied by substituting *25 percent' for 10 percent'.". (B) FAILURE TO REPORT.— Section 6693 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: " (c) PENALTIES RELATING TO SIMPLE RETIREMENT ACCOUNTS.— "(1) EMPLOYER PENALTIES.—An employer who fails to provide 1 or more notices required by section 408(1)(2)(C) shall pay a penalty of $50 for each day on which such failures continue. "(2) TRUSTEE PENALTIES.— A trustee who fails—
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