Sec. 317. Allow certain plan transfers and mergers
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Section 414 is amended by adding at the end the following new subsection: Under rules prescribed by the Secretary, no amount shall be includible in gross income by reason of— a transfer of all or a portion of the account balance of a participant or beneficiary, whether or not vested, from a defined contribution plan described in section 401(a) or section 403(a) of an employer to an annuity contract described in section 403(b) of the same employer, a transfer of all or a portion of the account balance of a participant or beneficiary, whether or not vested, from an annuity contract described in section 403(b) of an employer to a defined contribution plan described in section 401(a) or section 403(a) of the same employer, or a merger of a defined contribution plan described in section 401(a) or section 403(a) of an employer with an annuity contract described in section 403(b) of the same employer, so long as the transfer or merger does not cause a reduction in the vested benefit or total benefit (including non-vested benefit) of any participant or beneficiary.
A plan or contract shall not fail to be considered to be described in sections 401(a), 403(a), or 403(b) (as applicable) merely because such plan or contract engages in a transfer or merger described in this paragraph. Amounts transferred or merged pursuant to paragraph
(1)shall be subject to the requirements of paragraphs
(3)and
(4)and to the distribution requirements under sections 401(a), 403(a), or 403(b) applicable to the transferee or merged plan. In the case of a transfer or merger described in paragraph (1), amounts in the transferee or merged plan that are attributable to the transferor or predecessor plan shall— be subject to section 401(a)(11) and section 205 of the Employee Retirement Income Security Act of 1974 to the extent that such sections applied to such amounts in the transferor or predecessor plan, or be required to satisfy the requirements of section 401(a)(11)(B)(iii)(I) and section 205(b)(1)(C)(i) of the Employee Retirement Income Security Act of 1974 to the extent that such sections applied to such amounts in the transferor or predecessor plan, and be treated as subject to section 411(d)(6) and section 204(g) of the Employee Retirement Income Security Act of 1974 to the extent that such amounts were subject to such sections in the transferor or predecessor plan. Under rules prescribed by the Secretary, to the extent amounts transferred or merged pursuant to paragraph
(1)were otherwise entitled to grandfather treatment under the transferor or predecessor plan, such amounts (and income or loss attributable thereto) shall remain entitled to such treatment under the transferee or merged plan. The rules prescribed by the Secretary shall require that such amounts be separately accounted for by the transferee or merged plan. For purposes of this paragraph, the term grandfather treatment means any special treatment under this title that is provided for prior benefits, prior periods of time, or certain individuals in connection with a change in the applicable law. In the case of a qualified trust described in section 401(a) or 403(a) and an annuity contract described in section 403(b) with respect to which transfers may be made only with the consent of a participant or beneficiary pursuant to the terms of such trust or contract or pursuant to applicable law, such consent requirement shall apply without regard to this subsection. Nothing in this subsection shall affect the application of contract or plan terms otherwise applicable in the case of a withdrawal from the contract or plan. . Paragraph
(2)of section 414(t) is amended by inserting 414(aa), after 274(j), . The heading of subsection
(z)of section 414 is amended by striking and inserting plan . church plan Section 4 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1003 ) is amended by adding at the end the following new subsection: This title shall apply to any plan or contract described in section 414(bb) of the Internal Revenue Code of 1986 to the extent necessary to comply with the requirements of such section. . The amendments made by this section shall apply to transfers or mergers in years beginning after the Secretary of the Treasury prescribes rules under section 414(aa) of the Internal Revenue Code of 1986, as added by this section. The Secretary of the Treasury shall issue rules under section 414(aa) of the Internal Code of 1986, as so added, within 1 year after the date of the enactment of this Act.
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Sec. 317
Allow certain plan transfers and mergers
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