920
PUBLIC LAW 93-406-SEPT. 2, 1974
[88 STAT.
"(3) benefits provided by the plan are equal to the benefits provided under each contract at normal retirement age under the plan and are guaranteed by an insurance carrier (licensed under the laws of a State to do business with the plan) to the extent premiums have been paid, "(4) premiums payable for the plan year, and all prior plan years, under such contracts have been paid before lapse or there is reinstatement of the policy, " (5) no rights under such contracts have been subject to a security interest at any time during the plan year, and "(6) no policy loans are outstanding at any time during the plan year. A plan funded exclusively by the purchase of group insurance contracts which is determined under regulations prescribed by the Secretary or his delegate to have the same characteristics as contracts described in the preceding sentence shall be treated as a plan described in this subsection." (b)
EXCISE TAX ON FAILURE To MEET MINIMUM FUNDING STAND-
ARDS.—Subtitle D (relating to miscellaneous excise taxes) is amended by adding at the end thereof the following new chapter: "CHAPTER 43—QUAHFIED PENSION, ETC., PLANS "Sec. 4971. Taxes on failure to meet minimum funding standards. 26 USC 4971.
"SEC. 4971. TAXES ON FAILURE TO MEET MINIMUM FUNDING STANDARDS. " (a) INITIAL TAX.—For each taxable year of an employer who
Ante, p. 914.
maintains a plan to which section 412 applies, there is hereby imposed a tax of 5 percent on the amount of the accumulated funding deficiency under the plan, determined as of the end of the plan year ending with or within such taxable year. The tax imposed by this subsection shall be paid by the employer responsible for contributing to or under the plan the amount described in section 412(b)(3)(A). "(b) ADDITIONAL TAX.—In any case in which an initial tax is imposed by subsection (a) on an accumulated funding deficiency and such accumulated funding deficiency is not corrected within the correction period, there is hereby imposed a tax equal to 100 percent of such accumulated funding deficiency to the extent not corrected. The tax imposed by this subsection shall be paid by the employer described in subsection (a). " (c) DEFINITIONS.—For purposes of this section— "(1) ACCUMULATED FUNDING DEFICIENCY.—The term 'accumulated funding deficiency' has the meaning given to such term by the last sentence of section 412(a). "(2) CORRECT.—The term 'correct' means, with respect to an accumulated funding deficiency, the contribution, to or under the plan, of the amount necessary to reduce such accumulated funding deficiency as of the end of a plan year in which such deficiency arose to zero. "(3) CORRECTION PERIOD.—The term 'correction period' means, with respect to an accumulated funding deficiency, the period beginning with the end of a plan year in which there is an accumulated funding deficiency and ending 90 days after the date of mailjjjg of a notice of deficiency under section 6212 with respect to the tax imposed by subsection (b),extended— " (A) by any period in which a deficiency cannot be assessed undersection 6213(a), and
V 26 USC 6212. 26 USC 6213.
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