PUBLIC LAW 95-600—NOV. 6, 1978
92 STAT. 2799
savings) is amended by adding at the end thereof the following new paragraph:
- '(7) SiMPUFiED EMPLOYEE PENSIONS.—In the case of an
employer contribution on behalf of the employee to a simplified employee pension, paragraph (2) shall not apply with respect to the employer contribution and the limitation under paragraph (1) shall be the lesser of— "(A) 15 percent of compensation includible in the employee's gross income for the taxable year (determined without regard to the employer contribution to the simplified employee pension), or "(B) the sum of— "(i) the amount contributed by the employer to the simplified employee pension and included in gross income (but not in excess of $7,500), and "(ii) $1,500, reduced (but not below zero) by the amount described in clause (i). In the case of an employee who is an officer, shareholder, or owner-employee described in section 408(k)(3), the amount 26 USC 408. referred to in subparagraph (B) shall be reduced by the amount of tax taken into account with respect to such individual under subparagraph (D) of section 408(k)(3)." (d) EMPLOYEES OF ENTERPRISES UNDER COMMON CONTROL.—Subsec-
tions (b) and (c) of section 414 are each amended by inserting "408(k)," 26 USC 414. after "401,". (e) SIMPLIFIED EMPLOYEE PENSION MAY B E TAKEN INTO ACCOUNT IN DETERMINING WHETHER EMPLOYER MEETS CERTAIN OTHER NONDIS-
CRIMINATION PROVISIONS.—Paragraph (5) of section 401(a) is amended 26 USC 401. by adding at the end thereof the following new sentence: "For purposes of determining whether one or more plans of an employer satisfy the requirements of paragraph (4) and of section 410(b), an 26 USC 410. employer may take into account all simplified employee pensions to which only the employer contributes." (f) EMPLOYER DEDUCTIONS.—Section 404 (relating to deduction for
contributions of an employer) is amended by adding the following new subsection at the end thereof: "(h) SPECIAL RULES FOR SIMPUFIED EMPLOYEE PENSIONS.—
"(1) IN GENERAL,—Employer contributions to a simplified employee pension shall be treated as if they are made to a plein subject to the requirements of this section. Employer contributions to a simplified employee pension are subject to the following limitations: "(A) Contributions made for a calendar year are deductible for the taxable year with which or within which the calendar year ends. "(B) Contributions made within dVz months after the close of a calendar year are treated as if they were made on the last day of such calendar year if they are made on account of such calendar year. "(C) The amount deductible in a taxable year for a simplified employee pension shall not exceed 15 percent of the compensation paid to the employees during the calendar year ending with or within the taxable year. The excess of the amount contributed over the amount deductible for a taxable year shall be deductible in the succeeding taxable years in order of time, subject to the 15 percent limit of the preceding sentence.
26 USC 404.
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