192
participants to make the same elec-
tion with respect to the additional
elective deferrals under this sub-
section.
‘‘(B) AGGREGATION.—For purposes
of subparagraph (A), all plans main-
tained by employers who are treated
as a single employer under sub-
section (b), (c), (m), or (o) of section
414 shall be treated as 1 plan.
‘‘(5) ELIGIBLE
PARTICIPANT.—For pur-
poses of this subsection, the term ‘eligible
participant’ means, with respect to any
plan year, a participant in a plan—
‘‘(A) who has attained the age of
50 before the close of the plan year,
and
‘‘(B) with respect to whom no
other elective deferrals may (without
regard to this subsection) be made to
the plan for the plan year by reason
of the application of any limitation or
other restriction described in para-
graph (3) or comparable limitation
contained in the terms of the plan.
193
‘‘(6) OTHER
DEFINITIONS
AND
RULES.—
For purposes of this subsection—
‘‘(A) APPLICABLE EMPLOYER PLAN.—
The term ‘applicable employer plan’
means—
‘‘(i) an employees’ trust de-
scribed in section 401(a) which is
exempt from tax under section
501(a),
‘‘(ii) 
a 
plan 
under 
which
amounts are contributed by an in-
dividual’s employer for an annu-
ity contract described in section
403(b),
‘‘(iii) an eligible deferred com-
pensation plan under section 457
of an eligible employer as defined
in section 457(e)(1)(A), and
‘‘(iv) an arrangement meeting
the requirements of section 408
(k) or (p).
‘‘(B) 
ELECTIVE
DEFERRAL.—The
term ‘elective deferral’ has the mean-
ing given such term by subsection
(u)(2)(C).
194
‘‘(C) EXCEPTION
FOR
SECTION
457
PLANS.—This 
subsection 
shall 
not
apply to an applicable employer plan
described in subparagraph (A)(iii) for
any year to which section 457(b)(3)
applies.
‘‘(D) COST-OF-LIVING ADJUSTMENT.—
In the case of a year beginning after
December 31, 2005, the Secretary
shall 
adjust 
annually 
the 
$5,000
amount in paragraph (2)(A) for in-
creases in the cost-of-living at the
same time and in the same manner as
adjustments under section 415(d); ex-
cept that the base period taken into
account shall be the calendar quarter
beginning July 1, 2004, and any in-
crease 
under 
this 
subparagraph
which is not a multiple of $500 shall
be rounded to the next lower multiple
of $500.’’.
(b) EFFECTIVE
DATE.—The amendment
made by this section shall apply to contribu-
tions in taxable years beginning after Decem-
ber 31, 2000.
195
SEC. 302. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF
EMPLOYEES 
TO 
DEFINED 
CONTRIBUTION
PLANS.
(a) EQUITABLE TREATMENT.—
(1) IN GENERAL.—Subparagraph (B) of
section 415(c)(1) (relating to limitation
for defined contribution plans) is amend-
ed by striking ‘‘25 percent’’ and inserting
‘‘100 percent’’.
(2) APPLICATION
TO
SECTION 403(b).—
Section 403(b) is amended—
(A) by striking ‘‘the exclusion al-
lowance for such taxable year’’ in
paragraph (1) and inserting ‘‘the ap-
plicable limit under section 415’’;
(B) by striking paragraph (2); and
(C) by inserting ‘‘or any amount
received by a former employee after
the fifth taxable year following the
taxable year in which such employee
was terminated’’ before the period at
the end of the second sentence of
paragraph (3).
(3) CONFORMING AMENDMENTS.—
(A) Subsection (f) of section 72 is
amended 
by 
striking 
‘‘section
196
403(b)(2)(D)(iii))’’ and inserting ‘‘sec-
tion 403(b)(2)(D)(iii), as in effect be-
fore the enactment of the Comprehen-
sive Retirement Security and Pension
Reform Act of 2001)’’.
(B) 
Section 
404(a)(10)(B) 
is
amended by striking ‘‘, the exclusion
allowance under section 403(b)(2),’’.
(C) Section 415(a)(2) is amended
by striking ‘‘, and the amount of the
contribution for such portion shall re-
duce the exclusion allowance as pro-
vided in section 403(b)(2)’’.
(D) Section 415(c)(3) is amended
by adding at the end the following
new subparagraph:
‘‘(E) ANNUITY
CONTRACTS.—In the
case of an annuity contract described
in section 403(b), the term ‘partici-
pant’s compensation’ means the par-
ticipant’s includible compensation de-
termined under section 403(b)(3).’’.
(E) Section 415(c) is amended by
striking paragraph (4).
198
may be taken into account for pur-
poses of this subparagraph for all
years may not exceed $40,000.
‘‘(C) ANNUAL
ADDITION.—For pur-
poses of this paragraph, the term ‘an-
nual addition’ has the meaning given
such term by paragraph (2).’’.
(G) Subparagraph (B) of section
402(g)(7) (as redesignated by section
201) is amended by inserting before
the period at the end the following:
‘‘(as in effect before the enactment of
the Comprehensive Retirement Secu-
rity and Pension Reform Act of
2001)’’.
(H) Section 664(g) is amended—
(i) in paragraph (3)(E) by
striking ‘‘limitations under sec-
tion 415(c)’’ and inserting ‘‘appli-
cable limitation under paragraph
(7)’’, and
(ii) by adding at the end the
following new paragraph:
‘‘(7) APPLICABLE LIMITATION.—
199
‘‘(A) IN GENERAL.—For purposes of
paragraph (3)(E), the applicable limi-
tation under this paragraph with re-
spect to a participant is an amount
equal to the lesser of—
‘‘(i) $30,000, or
‘‘(ii) 25 percent of the partici-
pant’s compensation (as defined
in section 415(c)(3)).
‘‘(B) COST-OF-LIVING ADJUSTMENT.—
The Secretary shall adjust annually
the $30,000 amount under subpara-
graph (A)(i) at the same time and in
the same manner as under section
415(d), except that the base period
shall be the calendar quarter begin-
ning October 1, 1993, and any in-
crease 
under 
this 
subparagraph
which is not a multiple of $5,000 shall
be rounded to the next lowest mul-
tiple of $5,000.’’.
(3) EFFECTIVE DATE.—The amendments
made by this subsection shall apply to
years beginning after December 31, 2000.
200
(b) SPECIAL RULES FOR SECTIONS 403(b) AND
408.—
(1) IN GENERAL.—Subsection (k) of sec-
tion 415 is amended by adding at the end
the following new paragraph:
‘‘(4) 
SPECIAL
RULES
FOR
SECTIONS
403(b) AND 408.—For purposes of this sec-
tion, any annuity contract described in
section 403(b) for the benefit of a partici-
pant shall be treated as a defined con-
tribution plan maintained by each em-
ployer with respect to which the partici-
pant has the control required under sub-
section (b) or (c) of section 414 (as modi-
fied by subsection (h)). For purposes of
this section, any contribution by an em-
ployer to a simplified employee pension
plan for an individual for a taxable year
shall be treated as an employer contribu-
tion to a defined contribution plan for
such individual for such year.’’.
(2) EFFECTIVE DATE.—
(A) IN GENERAL.—The amendment
made by paragraph (1) shall apply to
201
limitation years beginning after De-
cember 31, 1999.
(B) EXCLUSION ALLOWANCE.—Effec-
tive for limitation years beginning in
2000, in the case of any annuity con-
tract described in section 403(b) of
the Internal Revenue Code of 1986,
the amount of the contribution dis-
qualified by reason of section 415(g)
of such Code shall reduce the exclu-
sion allowance as provided in section
403(b)(2) of such Code.
(3) MODIFICATION OF 403(b) EXCLUSION
ALLOWANCE TO CONFORM TO 415 MODIFICA-
TION.—The Secretary of the Treasury
shall modify the regulations regarding
the exclusion allowance under section
403(b)(2) of the Internal Revenue Code of
1986 to render void the requirement that
contributions to a defined benefit pen-
sion plan be treated as previously ex-
cluded amounts for purposes of the exclu-
sion allowance. For taxable years begin-
ning after December 31, 1999, such regu-
202
lations shall be applied as if such re-
quirement were void.
(c) DEFERRED
COMPENSATION
PLANS
OF
STATE AND LOCAL GOVERNMENTS AND TAX-EX-
EMPT ORGANIZATIONS.—
(1) IN GENERAL.—Subparagraph (B) of
section 457(b)(2) (relating to salary limi-
tation on eligible deferred compensation
plans) is amended by striking ‘‘331⁄3 per-
cent’’ and inserting ‘‘100 percent’’.
(2) EFFECTIVE DATE.—The amendment
made by this subsection shall apply to
years beginning after December 31, 2000.
SEC. 
303. 
FASTER 
VESTING 
OF 
CERTAIN 
EMPLOYER
MATCHING CONTRIBUTIONS.
(a) AMENDMENT
OF
INTERNAL
REVENUE
CODE.—Section 411(a) (relating to minimum
vesting standards) is amended—
(1) in paragraph (2), by striking ‘‘A
plan’’ and inserting ‘‘Except as provided
in paragraph (12), a plan’’; and
(2) by adding at the end the fol-
lowing:
‘‘(12) FASTER
VESTING
FOR
MATCHING
CONTRIBUTIONS.—In the case of matching