219
contributions exceed the full-funding limitation (as
defined in section 412(c)(7), determined without re-
gard to subparagraph (A)(i)(I) thereof). For purposes
of this paragraph, the deductible limits under section
404(a)(7) shall first be applied to amounts contrib-
uted to defined contribution plans and then to
amounts described in this paragraph. If an employer
makes an election under this paragraph for a taxable
year, paragraph (6) shall not apply to such employer
for such taxable year.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to years beginning after December 31,
2000.
SEC. 504. TREATMENT OF MULTIEMPLOYER PLANS UNDER
SECTION 415.
(a) COMPENSATION LIMIT.—
(1) IN
GENERAL.—Paragraph (11) of section
415(b) (relating to limitation for defined benefit
plans) is amended to read as follows:
‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN-
MENTAL AND MULTIEMPLOYER PLANS.—In the case of
a governmental plan (as defined in section 414(d)) or
a multiemployer plan (as defined in section 414(f)),
subparagraph (B) of paragraph (1) shall not apply.’’.
220
(2) 
CONFORMING
AMENDMENT.—Section
415(b)(7) (relating to benefits under certain collec-
tively bargained plans) is amended by inserting
‘‘(other than a multiemployer plan)’’ after ‘‘defined
benefit plan’’ in the matter preceding subparagraph
(A).
(b) COMBINING AND AGGREGATION OF PLANS.—
(1) COMBINING OF PLANS.—Subsection (f) of sec-
tion 415 (relating to combining of plans) is amended
by adding at the end the following:
‘‘(3) EXCEPTION FOR MULTIEMPLOYER PLANS.—
Notwithstanding paragraph (1) and subsection (g), a
multiemployer plan (as defined in section 414(f))
shall not be combined or aggregated with any other
plan maintained by an employer for purposes of ap-
plying subsection (b)(1)(B) to such plan or any other
such plan.’’.
(2) CONFORMING AMENDMENT FOR AGGREGATION
OF PLANS.—Subsection (g) of section 415 (relating to
aggregation of plans) is amended by striking ‘‘The
Secretary’’ and inserting ‘‘Except as provided in sub-
section (f)(3), the Secretary’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to years beginning after December 31,
2000.
221
SEC. 505. PROTECTION OF INVESTMENT OF EMPLOYEE
CONTRIBUTIONS TO 401(K) PLANS.
(a) IN GENERAL.—Section 1524(b) of the Taxpayer
Relief Act of 1997 is amended to read as follows:
‘‘(b) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to elective deferrals for plan years beginning
after December 31, 1998.
‘‘(2) NONAPPLICATION TO PREVIOUSLY ACQUIRED
PROPERTY.—The amendments made by this section
shall not apply to any elective deferral which is in-
vested in assets consisting of qualifying employer se-
curities, qualifying employer real property, or both, if
such assets were acquired before January 1, 1999.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply as if included in the provision of the
Taxpayer Relief Act of 1997 to which it relates.
SEC. 506. PERIODIC PENSION BENEFITS STATEMENTS.
(a) IN GENERAL.—Section 105(a) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1025 (a))
is amended to read as follows:
‘‘(a)(1) Except as provided in paragraph (2)—
‘‘(A) the administrator of an individual account
plan shall furnish a pension benefit statement—
222
‘‘(i) to a plan participant at least once an-
nually, and
‘‘(ii) to a plan beneficiary upon written re-
quest, and
‘‘(B) the administrator of a defined benefit plan
shall furnish a pension benefit statement—
‘‘(i) at least once every 3 years to each par-
ticipant with a nonforfeitable accrued benefit
who is employed by the employer maintaining
the plan at the time the statement is furnished
to participants, and
‘‘(ii) to a participant or beneficiary of the
plan upon written request.
‘‘(2) Notwithstanding paragraph (1), the adminis-
trator of a plan to which more than 1 unaffiliated employer
is required to contribute shall only be required to furnish
a pension benefit statement under paragraph (1) upon the
written request of a participant or beneficiary of the plan.
‘‘(3) A pension benefit statement under paragraph
(1)—
‘‘(A) shall indicate, on the basis of the latest
available information—
‘‘(i) the total benefits accrued, and
223
‘‘(ii) the nonforfeitable pension benefits, if
any, which have accrued, or the earliest date on
which benefits will become nonforfeitable,
‘‘(B) shall be written in a manner calculated to
be understood by the average plan participant, and
‘‘(C) may be provided in written, electronic, tele-
phonic, or other appropriate form.
‘‘(4) In the case of a defined benefit plan, the require-
ments of paragraph (1)(B)(i) shall be treated as met with
respect to a participant if the administrator provides the
participant at least once each year with notice of the avail-
ability of the pension benefit statement and the ways in
which the participant may obtain such statement. Such no-
tice shall be provided in written, electronic, telephonic, or
other appropriate form, and may be included with other
communications to the participant if done in a manner
reasonably designed to attract the attention of the partici-
pant.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 105 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1025) is
amended by striking subsection (d).
(2) Section 105(b) of such Act (29 U.S.C.
1025(b)) is amended to read as follows:
224
‘‘(b) In no case shall a participant or beneficiary of
a plan be entitled to more than one statement described in
subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is applica-
ble, in any 12-month period.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to plan years beginning after December
31, 2000.
SEC. 507. PROHIBITED ALLOCATIONS OF STOCK IN S COR-
PORATION ESOP.
(a) IN GENERAL.—Section 409 (relating to qualifica-
tions for tax credit employee stock ownership plans) is
amended by redesignating subsection (p) as subsection (q)
and by inserting after subsection (o) the following new sub-
section:
‘‘(p) PROHIBITED ALLOCATIONS OF SECURITIES IN AN
S CORPORATION.—
‘‘(1) IN GENERAL.—An employee stock ownership
plan holding employer securities consisting of stock in
an S corporation shall provide that no portion of the
assets of the plan attributable to (or allocable in lieu
of) such employer securities may, during a nonalloca-
tion year, accrue (or be allocated directly or indi-
rectly under any plan of the employer meeting the re-
quirements of section 401(a)) for the benefit of any
disqualified person.
225
‘‘(2) FAILURE TO MEET REQUIREMENTS.—
‘‘(A) IN GENERAL.—If a plan fails to meet
the requirements of paragraph (1), the plan shall
be treated as having distributed to any disquali-
fied person the amount allocated to the account
of such person in violation of paragraph (1) at
the time of such allocation.
‘‘(B) CROSS REFERENCE.—
‘‘For excise tax relating to violations of paragraph
(1) and ownership of synthetic equity, see section
4979A.
‘‘(3) NONALLOCATION
YEAR.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘nonalloca-
tion year’ means any plan year of an employee
stock ownership plan if, at any time during such
plan year—
‘‘(i) such plan holds employer securi-
ties consisting of stock in an S corporation,
and
‘‘(ii) disqualified persons own at least
50 percent of the number of shares of stock
in the S corporation.
‘‘(B) ATTRIBUTION
RULES.—For purposes
of subparagraph (A)—
226
‘‘(i) IN GENERAL.—The rules of section
318(a) shall apply for purposes of deter-
mining ownership, except that—
‘‘(I) in applying paragraph (1)
thereof, the members of an individual’s
family shall include members of the
family described in paragraph (4)(D),
and
‘‘(II) paragraph (4) thereof shall
not apply.
‘‘(ii) DEEMED-OWNED
SHARES.—Not-
withstanding the employee trust exception
in section 318(a)(2)(B)(i), individual shall
be treated as owning deemed-owned shares
of the individual.
Solely for purposes of applying paragraph (5),
this subparagraph shall be applied after the at-
tribution rules of paragraph (5) have been ap-
plied.
‘‘(4) DISQUALIFIED
PERSON.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—The term ‘disqualified
person’ means any person if—
‘‘(i) the aggregate number of deemed-
owned shares of such person and the mem-
227
bers of such person’s family is at least 20
percent of the number of deemed-owned
shares of stock in the S corporation, or
‘‘(ii) in the case of a person not de-
scribed in clause (i), the number of deemed-
owned shares of such person is at least 10
percent of the number of deemed-owned
shares of stock in such corporation.
‘‘(B) TREATMENT OF FAMILY MEMBERS.—
In the case of a disqualified person described in
subparagraph (A)(i), any member of such per-
son’s family with deemed-owned shares shall be
treated as a disqualified person if not otherwise
treated as a disqualified person under subpara-
graph (A).
‘‘(C) DEEMED-OWNED SHARES.—
‘‘(i) IN GENERAL.—The term ‘deemed-
owned shares’ means, with respect to any
person—
‘‘(I) the stock in the S corporation
constituting employer securities of an
employee stock ownership plan which
is allocated to such person under the
plan, and
228
‘‘(II) such person’s share of the
stock in such corporation which is held
by such plan but which is not allocated
under the plan to participants.
‘‘(ii) 
PERSON’S
SHARE
OF
UNALLOCATED
STOCK.—For purposes of
clause 
(i)(II), 
a 
person’s 
share 
of
unallocated S corporation stock held by
such plan is the amount of the unallocated
stock which would be allocated to such per-
son if the unallocated stock were allocated to
all participants in the same proportions as
the most recent stock allocation under the
plan.
‘‘(D) MEMBER OF FAMILY.—For purposes of
this paragraph, the term ‘member of the family’
means, with respect to any individual—
‘‘(i) the spouse of the individual,
‘‘(ii) an ancestor or lineal descendant
of the individual or the individual’s spouse,
‘‘(iii) a brother or sister of the indi-
vidual or the individual’s spouse and any
lineal descendant of the brother or sister,
and
229
‘‘(iv) the spouse of any individual de-
scribed in clause (ii) or (iii).
A spouse of an individual who is legally sepa-
rated from such individual under a decree of di-
vorce or separate maintenance shall not be treat-
ed as such individual’s spouse for purposes of
this subparagraph.
‘‘(5) TREATMENT OF SYNTHETIC EQUITY.—For
purposes of paragraphs (3) and (4), in the case of a
person who owns synthetic equity in the S corpora-
tion, except to the extent provided in regulations, the
shares of stock in such corporation on which such
synthetic equity is based shall be treated as out-
standing stock in such corporation and deemed-owned
shares of such person if such treatment of synthetic
equity of 1 or more such persons results in—
‘‘(A) the treatment of any person as a dis-
qualified person, or
‘‘(B) the treatment of any year as a non-
allocation year.
For purposes of this paragraph, synthetic equity shall
be treated as owned by a person in the same manner
as stock is treated as owned by a person under the
rules of paragraphs (2) and (3) of section 318(a). If,
without regard to this paragraph, a person is treated