‘‘(A) IN GENERAL.—In the case of any in-
dividual, if the aggregate contributions (other 
than rollover contributions) paid for any taxable 
year to an individual retirement account or for 
an individual retirement annuity do not exceed 
the dollar amount in effect under subsection 
(a)(1) or (b)(2)(C), as the case may be, para-
graph (1) shall not apply to the distribution of 
any such contribution to the extent that such 
contribution exceeds the amount which is ex-
cludable from gross income under subsection 
(h) or (k) of section 402, as the case may be, 
for the taxable year for which the contribution 
was paid— 
‘‘(i) if such distribution is received 
after the date described in paragraph (4), 
‘‘(ii) but only to the extent that such 
excess contribution has not been excluded 
from gross income under subsection (h) or 
(k) of section 402.’’. 
(C) Section 408(d)(5) is amended by striking 
the last sentence. 
(D) Section 408(d)(7) is amended to read as 
follows:
‘‘(7) CERTAIN
TRANSFERS
FROM
SIMPLIFIED 
EMPLOYEE PENSIONS PROHIBITED UNTIL DEFERRAL 
TEST MET.—Notwithstanding any other provision of 
this subsection or section 72(t), paragraph (1) and 
section 72(t)(1) shall apply to the transfer or dis-
tribution from a simplified employee pension of any 
contribution under a salary reduction arrangement 
described in subsection (k)(6) (or any income allo-
cable thereto) before a determination as to whether 
the requirements of subsection (k)(6)(A)(iii) are met 
with respect to such contribution.’’. 
(E) Section 408 is amended by striking sub-
section (j). 
(F)(i) Section 408 is amended by striking sub-
section (o). 
(ii) Section 6693 is amended by striking sub-
section (b) and by redesignating subsections (c) and 
(d) as subsections (b) and (c), respectively. 
(G) Section 408(p) is amended by striking 
paragraph (8) and by redesignating paragraphs (9) 
and (10) as paragraphs (8) and (9), respectively. 
(3)(A) Section 4973(a)(1) is amended to read 
as follows: 
‘‘(1) an individual retirement plan,’’.
(B) Section 4973(b) is amended to read as fol-
lows: 
‘‘(b) EXCESS CONTRIBUTIONS TO SIMPLIFIED EM-
PLOYEE
PENSIONS
AND
SIMPLE
RETIREMENT
AC-
COUNTS.—For purposes of this section, in the case of sim-
plified employee pensions or simple retirement accounts, 
the term ‘excess contributions’ means the sum of— 
‘‘(1) the excess (if any) of— 
‘‘(A) the amount contributed for the tax-
able year to the pension or account, over 
‘‘(B) the amount applicable to the pension 
or account under subsection (a)(1) or (b)(2) of 
section 408, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the account 
for the taxable year which were included in the 
gross income of the payee under section 
408(d)(1), 
‘‘(B) the distributions out of the account 
for the taxable year to which section 408(d)(5) 
applies, and 
‘‘(C) the excess (if any) of the maximum 
amount excludable from gross income for the
taxable year under subsection (h) or (k) of sec-
tion 402 over the amount contributed to the 
pension or account for the taxable year. 
For purposes of this subsection, any contribution 
which is distributed from a simplified employee pen-
sion or simple retirement account in a distribution 
to which section 408(d)(4) applies shall be treated 
as an amount not contributed.’’. 
(C) Section 4973 is amended by adding at the 
end the following new subsection: 
‘‘(h) EXCESS CONTRIBUTIONS
TO CERTAIN INDI-
VIDUAL RETIREMENT PLANS.—For purposes of this sec-
tion, in the case of individual retirement plans (other than 
retirement savings accounts, simplified employee pensions, 
and simple retirement accounts), the term ‘excess con-
tribution’ means the sum of— 
‘‘(1) the aggregate amount contributed for the 
taxable year to the individual retirement plans, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the plans 
which were included in gross income under sec-
tion 408(d)(1), and