(A) IN GENERAL.—Section 457(e) (relat-
ing to other definitions and special rules) is
amended by adding at the end the following:
‘‘(16) ROLLOVER AMOUNTS.—
‘‘(A) GENERAL RULE.—In the case of an
eligible deferred compensation plan of an eligi-
ble employer described in paragraph (1)(A),
if—
‘‘(i) any portion of the balance to the
credit of an employee in such plan is paid
to such employee in an eligible rollover dis-
tribution (within the meaning of section
402(c)(4)),
‘‘(ii) the employee transfers any por-
tion of the property such employee receives
in such distribution to an eligible retire-
ment 
plan 
described 
in 
section
402(c)(8)(B), and
‘‘(iii) in the case of a distribution of
property other than money, the amount so
transferred consists of the property distrib-
uted,
then such distribution (to the extent so trans-
ferred) shall not be includible in gross income
for the taxable year in which paid.
‘‘(B) CERTAIN
RULES
MADE
APPLICA-
BLE.—Rules similar to the rules of paragraphs
(2) through (7) and (9) of section 402(c) and
section 402(f) shall apply for purposes of sub-
paragraph (A).
‘‘(C) REPORTING.—Rollovers under this
paragraph shall be reported to the Secretary in
the same manner as rollovers from qualified re-
tirement 
plans 
(as 
defined 
in 
section
4974(c)).’’.
(B) DEFERRAL LIMIT DETERMINED WITH-
OUT REGARD TO ROLLOVER AMOUNTS.—Section
457(b)(2) (defining eligible deferred compensa-
tion plan) is amended by inserting ‘‘(other than
rollover amounts)’’ after ‘‘taxable year’’.
(2) ROLLOVERS TO SECTION 457 PLANS.—
(A) Section 402(c)(8)(B) (defining eligible
retirement plan) is amended by striking ‘‘and’’
at the end of clause (iii), by striking the period
at the end of clause (iv) and inserting ‘‘, and’’,
and by adding at the end the following:
‘‘(v) an eligible deferred compensation
plan described in section 457(b) of an eli-
gible 
employer 
described 
in 
section
457(e)(1)(A).’’.
(B) Paragraph (9) of section 402(c) is
amended by striking ‘‘except that’’ and all that
follows and inserting ‘‘except that only an ac-
count or annuity described in clause (i) or (ii)
of paragraph (8)(B) shall be treated as an eligi-
ble retirement plan with respect to such dis-
tribution.’’.
(b) ALLOWANCE
OF ROLLOVERS FROM
AND TO
403(b) PLANS.—
(1) 
ROLLOVERS
FROM
SECTION
403(b)
PLANS.—Section 403(b)(8)(A)(ii) (relating to roll-
over amounts) is amended by striking ‘‘such dis-
tribution’’ and all that follows and inserting ‘‘such
distribution to an eligible retirement plan described
in section 402(c)(8)(B), and’’.
(2) ROLLOVERS TO SECTION 403(b) PLANS.—
Section 402(c)(8)(B) (defining eligible retirement
plan), as amended by subsection (a), is amended by
striking ‘‘and’’ at the end of clause (iv), by striking
the period at the end of clause (v) and inserting ‘‘,
and’’, and by adding at the end the following
‘‘(vi) an annuity contract described in
section 403(b).’’
(c) EXPANDED EXPLANATION TO RECIPIENTS OF
ROLLOVER DISTRIBUTIONS.—Paragraph (1) of section
402(f) (relating to written explanation to recipients of dis-
tributions eligible for rollover treatment) is amended by
striking ‘‘and’’ at the end of subparagraph (C), by striking
the period at the end of subparagraph (D) and inserting
‘‘, and’’, and by adding at the end the following new sub-
paragraph:
‘‘(E) of the provisions under which dis-
tributions from the eligible retirement plan re-
ceiving the distribution may be subject to re-
strictions and tax consequences which are dif-
ferent from those applicable to distributions
from the plan making such distribution.’’
(d) CONFORMING AMENDMENTS.—
(1) Section 72(o)(4) is amended by striking
‘‘and 
408(d)(3)’’ 
and 
inserting 
‘‘403(b)(8),
408(d)(3), and 457(e)(16)’’.
(2) Section 219(d)(2) is amended by striking
‘‘or 
408(d)(3)’’ 
and 
inserting 
‘‘408(d)(3), 
or
457(e)(16)’’.
(3) Section 401(a)(31)(B) is amended by strik-
ing ‘‘and 403(a)(4)’’ and inserting ‘‘, 403(a)(4),
403(b)(8), and 457(e)(16)’’.
(4) Subparagraph (B) of section 403(b)(8) is
amended by inserting ‘‘and (9)’’ after ‘‘through
(7)’’.
(5) Section 408(a)(1) is amended by striking
‘‘or 403(b)(8)’’ and inserting ‘‘, 403(b)(8), or
457(e)(16)’’.
(6) Subparagraphs (A) and (B) of section
415(b)(2) are each amended by striking ‘‘and
408(d)(3)’’ and inserting ‘‘403(b)(8), 408(d)(3), and
457(e)(16)’’.
(7) Section 415(c)(2) is amended by striking
‘‘and 408(d)(3)’’ and inserting ‘‘408(d)(3), and
457(e)(16)’’.
(8) Section 4973(b)(1)(A) is amended by strik-
ing ‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3), or
457(e)(16)’’.
(e) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to distributions after De-
cember 31, 1998.
(2) SPECIAL RULE.—Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of
section 1122 of the Tax Reform Act of 1986 shall
not apply to any distribution from an eligible retire-
ment plan on behalf of an individual if there was a
rollover to such plan on behalf of such individual
which is permitted solely by reason of any amend-
ment made by this section. For purposes of the pre-
ceding sentence, the term ‘‘eligible retirement plan’’
has the meaning given such term by section
402(c)(8)(B) of the Internal Revenue Code of 1986;
except that such term shall not include any individ-
ual 
retirement 
plan 
described 
in 
section
408(d)(3)(A)(ii) of such Code.
SEC. 302. ROLLOVERS OF IRAS INTO WORKPLACE RETIRE-
MENT PLANS.
(a) IN GENERAL.—Subparagraph (A) of section
408(d)(3) (relating to rollover amounts) is amended by
striking ‘‘or’’ at the end of clause (ii), by striking the pe-
riod at the end of clause (iii) and inserting a semicolon,
and by adding at the end the following:
‘‘(iv)(I) the entire amount received
(including money and other property) rep-
resents the entire interest in the account
or the entire value of the annuity,
‘‘(II) no amount in the account and
no part of the value of the annuity is at-
tributable to any source other than a roll-
over contribution from a defined contribu-
tion plan and any earnings on such roll-
over, and
‘‘(III) such entire amount received is
paid into another defined contribution plan
(for the benefit of such individual) not
later than the 60th day after he receives
the payment or distribution; or
‘‘(v)(I) the entire amount received (in-
cluding money and other property) rep-
resents the entire interest in the account
or the entire value of the annuity,
‘‘(II) no amount in any such account
and no part of the value of any such annu-
ity is attributable to any source other than
a rollover contribution from such an ac-
count or annuity of such individual (and
any earnings on such contribution),
‘‘(III) all contributions to all individ-
ual retirement accounts, and all amounts
paid for all individual retirement annuities,
of such individual were allowed as a deduc-
tion under section 219, and
‘‘(IV) such entire amount received is
paid (not later than the 60th day after
being so received) into a defined contribu-
tion plan (for the benefit of such individ-
ual) under which amounts are held in trust
by a person described in section 408(a)(2)
or in a manner that satisfies section
401(f).
If a payment or distribution from an individual
retirement plan is described in more than 1
clause of this subparagraph, such payment or
distribution shall be treated as described only in
the clause specified by the payee or distributee.
For purposes of this subparagraph, the term
‘defined contribution plan’ means a defined con-
tribution plan (as defined in section 414(i))
which includes a trust exempt from tax under
section 501(a), an annuity plan described in
section 403(a), an annuity contract described in
section 403(b), and an eligible deferred com-
pensation plan described in section 457(b) of an
eligible 
employer 
described 
in 
section
457(e)(1)(A).’’
(b) CONFORMING AMENDMENT.—Paragraph (1) of
section 
403(b) 
is 
amended 
by 
striking 
‘‘section
408(d)(3)(A)(iii)’’ and inserting ‘‘clause (iii), (iv), or (v)
of section 408(d)(3)(A)’’.
(c) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to distributions after De-
cember 31, 1998.
(2) SPECIAL RULE.—Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of
section 1122 of the Tax Reform Act of 1986 shall
not apply to any distribution from a defined con-
tribution plan (as defined in section 408(d)(3)(A) of
the Internal Revenue Code of 1986 (as added by
this section) on behalf of an individual if there was
a rollover to such plan on behalf of such individual
which is permitted solely by reason of the amend-
ments made by this section.
SEC. 303. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.
(a) IN GENERAL.—Paragraph (2) of section 402(c)
(relating to rules applicable to rollovers from exempt
trusts) is amended by adding at the end the following new
sentence: ‘‘In accordance with rules prescribed by the Sec-
retary, the preceding sentence shall not apply to any dis-
tribution if—
‘‘(A) the portion of the distribution which
would be so includible is reported by the trust-
ee, and
‘‘(B) the eligible retirement plan to which
it is paid agrees to report such amount in any
subsequent distribution.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 401(a)(31) is
amended by adding at the end the following new
sentence: ‘‘In accordance with rules prescribed by
the Secretary, the preceding sentence shall not apply
to any distribution if—
‘‘(i) the portion of the distribution
which would be so includible is reported by
the trustee, and
‘‘(ii) the eligible retirement plan to
which it is paid agrees to report such
amount in any subsequent distribution.’’
(2) Subparagraph (B) of section 408(d)(3) is
amended—
(A) by striking ‘‘LIMITATION.—’’ in the
heading and inserting ‘‘LIMITATIONS.—’’, and
(B) by adding at the end the following: ‘‘In
addition, this paragraph does not apply unless
rules similar to the rules of section 402(c)(2)
are satisfied, except that the rollover contribu-
tion may exceed the amount includible in in-
come to the extent the rollover contribution con-
sists of nondeductible contributions described in
subsection (o).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to distributions made after Decem-
ber 31, 1998.
SEC. 304. RATIONALIZE THE RESTRICTIONS ON DISTRIBU-
TIONS 
FROM 
DEFINED 
CONTRIBUTION
PLANS.
(a) DISTRIBUTIONS
PERMITTED
ON
SEVERANCE
FROM EMPLOYMENT.—
(1) 401(k) PLANS.—Section 401(k)(2)(B)(i)(I)
(relating to qualified cash or deferred arrangements)
is amended by striking ‘‘separation from service’’
and inserting ‘‘severance from employment’’.
(2) 403(b) CONTRACTS.—
(A) Clause (ii) of section 403(b)(7)(A) is
amended by striking ‘‘separates from service’’
and inserting ‘‘severs from employment’’.
(B) Paragraph (11) of section 403(b) is
amended—
(i) by striking ‘‘SEPARATION
FROM
SERVICE’’ in the heading and inserting
‘‘SEVERANCE FROM EMPLOYMENT’’, and
(ii) by striking ‘‘separates from serv-
ice’’ and inserting ‘‘severs from employ-
ment’’.
(3) 
457 
PLANS.—Clause 
(ii) 
of 
section
457(d)(1)(A) is amended by striking ‘‘is separated
from service’’ and inserting ‘‘has a severance from
employment’’.
(b) BUSINESS SALE REQUIREMENTS DELETED.—
(1) IN GENERAL.—Section 401(k)(2)(B)(i)(II)
(relating to qualified cash or deferred arrangements)
is amended by striking ‘‘an event’’ and inserting ‘‘a
plan termination’’.
(2) 
CONFORMING
AMENDMENTS.—Section
401(k)(10) is amended—
(A) by striking subparagraph (A) and in-
serting the following:
‘‘(A) IN GENERAL.—A plan termination is
described in this paragraph if the termination
of the plan does not involve the establishment
or maintenance of another defined contribution
plan (other than an employee stock ownership
plan as defined in section 4975(e)(7)).’’,
(B) in subparagraph (B)—
(i) by striking ‘‘An event’’ and insert-
ing ‘‘A termination’’, and
(ii) by striking ‘‘the event’’ and insert-
ing ‘‘the termination’’,
(C) by striking subparagraph (C), and
(D) by striking ‘‘OR DISPOSITION OF AS-
SETS OR SUBSIDIARY’’ in the heading.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to distributions after December 31,
1998.
SEC. 305. TRANSFEREE DEFINED CONTRIBUTION PLAN
NEED NOT HAVE SAME DISTRIBUTION OP-
TIONS AS TRANSFEROR DEFINED CONTRIBU-
TION PLAN.
(a) IN GENERAL.—Section 411(d)(6) (relating to ac-
crued benefit not to be decreased by amendment) is
amended by adding at the end the following new subpara-
graph:
‘‘(D) PLAN TRANSFERS.—A defined con-
tribution plan (in this subparagraph referred to
as the ‘transferee plan’) shall not be treated as
failing to meet the requirements of this para-
graph merely because the transferee plan does
not provide some or all of the forms of distribu-
tion previously available under another defined
contribution plan (in this subparagraph referred
to as the ‘transferor plan’) to the extent that—
‘‘(i) the forms of distribution pre-
viously available under the transferor plan
applied to the account of a participant or
‘‘(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.’’
(2) Section 457(b)(2), as amended by section 2,
is amended by striking ‘‘(other than rollover
amounts)’’ and inserting ‘‘(other than rollover
amounts and amounts received in a transfer referred
to in subsection (e)(16))’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to trustee-to-trustee transfers after
December 31, 1998.
TITLE IV—CREDIT FOR PENSION
PLAN 
STARTUP 
COSTS 
OF
SMALL EMPLOYERS
SEC. 401. CREDIT FOR PENSION PLAN STARTUP COSTS OF
SMALL EMPLOYERS.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related cred-
its) is amended by adding at the end the following new
section:
‘‘SEC. 45D. SMALL EMPLOYER PENSION PLAN STARTUP
COSTS.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of an eligible employer, the small employer pen-
sion plan startup cost credit determined under this section