111
‘‘(A) IN GENERAL.—The qualified retire-
ment savings contributions determined under
paragraph (1) shall be reduced (but not below
zero) by the aggregate distributions received by
the individual during the testing period from
any entity of a type to which contributions
under paragraph (1) may be made. The pre-
ceding sentence shall not apply to the portion of
any distribution which is not includible in gross
income by reason of a trustee-to-trustee trans-
fer or a rollover distribution.’’.
(n) AMENDMENTS RELATING TO SECTION 619 OF
THE ACT.—
(1) Section 45E(e)(1) is amended by striking
‘‘(n)’’ and inserting ‘‘(m)’’.
(2) Section 619(d) of the Economic Growth and
Tax Relief Reconciliation Act of 2001 is amended by
striking ‘‘established’’ and inserting ‘‘first effective’’.
(o) AMENDMENTS RELATING TO SECTION 631 OF
THE ACT.—
(1) Section 402(g)(1) is amended by adding at
the end the following:
‘‘(C) CATCH-UP CONTRIBUTIONS.—In ad-
dition to subparagraph (A), in the case of an el-
igible participant (as defined in section 414(v)),
112
gross income shall not include elective deferrals
in excess of the applicable dollar amount under
subparagraph (B) to the extent that the
amount of such elective deferrals does not ex-
ceed the applicable dollar amount under section
414(v)(2)(B)(i) for the taxable year (without
regard to the treatment of the elective deferrals
by an applicable employer plan under section
414(v)).’’.
(2) Section 401(a)(30) is amended by striking
‘‘402(g)(1)’’ and inserting ‘‘402(g)(1)(A)’’.
(3) Section 414(v)(2) is amended by adding at
the end the following:
‘‘(D) AGGREGATION OF PLANS.—For pur-
poses of this paragraph, plans described in
clauses (i), (ii), and (iv) of paragraph (6)(A)
that are maintained by the same employer (as
determined under subsection (b), (c), (m) or
(o)) shall be treated as a single plan, and plans
described in clause (iii) of paragraph (6)(A)
that are maintained by the same employer shall
be treated as a single plan.’’.
(4) Section 414(v)(3)(A)(i) is amended by strik-
ing ‘‘section 402(g), 402(h), 403(b), 404(a), 404(h),
408(k), 408(p), 415, or 457’’ and inserting ‘‘section
113
401(a)(30), 402(h), 403(b), 408, 415(c), and
457(b)(2) (determined without regard to section
457(b)(3))’’.
(5) Section 414(v)(3)(B) is amended by striking
‘‘section 
401(a)(4), 
401(a)(26), 
401(k)(3),
401(k)(11), 401(k)(12), 403(b)(12), 408(k), 408(p),
408B, 410(b), or 416’’ and inserting ‘‘section
401(a)(4), 
401(k)(3), 
401(k)(11), 
403(b)(12),
408(k), 410(b), or 416’’.
(6) Section 414(v)(4)(B) is amended by insert-
ing before the period at the end the following: ‘‘, ex-
cept that a plan described in clause (i) of section
410(b)(6)(C) shall not be treated as a plan of the
employer until the expiration of the transition period
with respect to such plan (as determined under
clause (ii) of such section)’’.
(7) Section 414(v)(5) is amended—
(A) by striking ‘‘, with respect to any plan
year,’’ in the matter preceding subparagraph
(A),
(B) by amending subparagraph (A) to read
as follows:
‘‘(A) who would attain age 50 by the end
of the taxable year,’’, and
114
(C) in subparagraph (B) by striking ‘‘plan
year’’ and inserting ‘‘plan (or other applicable)
year’’.
(8) Section 414(v)(6)(C) is amended to read as
follows:
‘‘(C) 
EXCEPTION
FOR
SECTION
457
PLANS.—This subsection shall not apply to a
participant for any year for which a higher limi-
tation applies to the participant under section
457(b)(3).’’.
(9) Section 457(e) is amended by adding at the
end the following new paragraph:
‘‘(18) COORDINATION
WITH
CATCH-UP
CON-
TRIBUTIONS FOR INDIVIDUALS AGE 50 OR OLDER.—
In the case of an individual who is an eligible partic-
ipant (as defined by section 414(v)) and who is a
participant in an eligible deferred compensation plan
of an employer described in paragraph (1)(A), sub-
sections (b)(3) and (c) shall be applied by sub-
stituting for the amount otherwise determined under
the applicable subsection the greater of—
‘‘(A) the sum of—
‘‘(i) the plan ceiling established for
purposes of subsection (b)(2) (without re-
gard to subsection (b)(3)), plus
115
‘‘(ii) the applicable dollar amount for
the taxable year determined under section
414(v)(2)(B)(i), or
‘‘(B) the amount determined under the ap-
plicable subsection (without regard to this para-
graph).’’.
(p) AMENDMENTS RELATING TO SECTION 632 OF
THE ACT.—
(1) Section 403(b)(1) is amended in the matter
following subparagraph (E) by striking ‘‘then
amounts contributed’’ and all that follows and in-
serting the following:
‘‘then contributions and other additions by such
employer for such annuity contract shall be excluded
from the gross income of the employee for the tax-
able year to the extent that the aggregate of such
contributions and additions (when expressed as an
annual addition (within the meaning of section
415(c)(2))) does not exceed the applicable limit
under section 415. The amount actually distributed
to any distributee under such contract shall be tax-
able to the distributee (in the year in which so dis-
tributed) under section 72 (relating to annuities).
For purposes of applying the rules of this subsection
to contributions and other additions by an employer
116
for a taxable year, amounts transferred to a contract
described in this paragraph by reason of a rollover
contribution described in paragraph (8) of this sub-
section or section 408(d)(3)(A)(ii) shall not be con-
sidered contributed by such employer.’’.
(2) Section 403(b) is amended by striking para-
graph (6).
(3) Section 403(b)(3) is amended—
(A) in the first sentence by inserting the
following before the period at the end: ‘‘, and
which precedes the taxable year by no more
than five years’’, and
(B) in the second sentence by striking ‘‘or
any amount received by a former employee after
the fifth taxable year following the taxable year
in which such employee was terminated’’.
(4) Section 415(c)(7) is amended to read as fol-
lows:
‘‘(7) SPECIAL
RULES
RELATING
TO
CHURCH
PLANS.—
‘‘(A) ALTERNATIVE
CONTRIBUTION
LIMI-
TATION.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of this subsection, at
the election of a participant who is an em-
117
ployee of a church or a convention or asso-
ciation of churches, including an organiza-
tion described in section 414(e)(3)(B)(ii),
contributions and other additions for an
annuity contract or retirement income ac-
count described in section 403(b) with re-
spect to such participant, when expressed
as an annual addition to such participant’s
account, shall be treated as not exceeding
the limitation of paragraph (1) if such an-
nual addition is not in excess of $10,000.
‘‘(ii) $40,000 
AGGREGATE
LIMITA-
TION.—The total amount of additions with
respect to any participant which may be
taken into account for purposes of this
subparagraph for all years may not exceed
$40,000.
‘‘(B) NUMBER OF YEARS OF SERVICE FOR
DULY ORDAINED, COMMISSIONED, OR LICENSED
MINISTERS OR LAY EMPLOYEES.—For purposes
of this paragraph—
‘‘(i) all years of service by—
‘‘(I) a duly ordained, commis-
sioned, or licensed minister of a
church, or
118
‘‘(II) a lay person,
as an employee of a church, a convention
or association of churches, including an or-
ganization 
described 
in 
section
414(e)(3)(B)(ii), shall be considered as
years of service for 1 employer, and
‘‘(ii) all amounts contributed for an-
nuity contracts by each such church (or
convention or association of churches) or
such organization during such years for
such minister or lay person shall be consid-
ered to have been contributed by 1 em-
ployer.
‘‘(C) FOREIGN MISSIONARIES.—In the case
of any individual described in subparagraph (D)
performing services outside the United States,
contributions and other additions for an annu-
ity contract or retirement income account de-
scribed in section 403(b) with respect to such
employee, when expressed as an annual addition
to such employee’s account, shall not be treated
as exceeding the limitation of paragraph (1) if
such annual addition is not in excess of the
greater of $3,000 or the employee’s includible
119
compensation 
determined 
under 
section
403(b)(3).
‘‘(D) ANNUAL ADDITION.—For purposes of
this paragraph, the term ‘annual addition’ has
the meaning given such term by paragraph (2).
‘‘(E) CHURCH, CONVENTION OR ASSOCIA-
TION
OF
CHURCHES.—For purposes of this
paragraph, the terms ‘church’ and ‘convention
or association of churches’ have the same mean-
ing as when used in section 414(e).’’.
(5) Section 457(e)(5) is amended to read as fol-
lows:
‘‘(5) INCLUDIBLE
COMPENSATION.—The term
‘includible compensation’ has the meaning given to
the term ‘participant’s compensation’ by section
415(c)(3).’’.
(6) Section 402(g)(7)(B) is amended by strik-
ing ‘‘2001.’’ and inserting ‘‘2001).’’.
(q) AMENDMENTS RELATING TO SECTION 643 OF
THE ACT.—
(1) Section 401(a)(31)(C)(i) is amended by in-
serting ‘‘is a qualified trust which is part of a plan
which is a defined contribution plan and’’ before
‘‘agrees’’.
120
(2) Section 402(c)(2) is amended by adding at
the end the following flush sentence:
‘‘In the case of a transfer described in subparagraph
(A) or (B), the amount transferred shall be treated
as consisting first of the portion of such distribution
that is includible in gross income (determined with-
out regard to paragraph (1)).’’.
(r) AMENDMENTS RELATING TO SECTION 648 OF
THE ACT.—
(1) Section 417(e) is amended—
(A) in paragraph (1) by striking ‘‘exceed
the dollar limit under section 411(a)(11)(A)’’
and inserting ‘‘exceed the amount that can be
distributed without the participant’s consent
under section 411(a)(11)’’, and
(B) in paragraph (2)(A) by striking ‘‘ex-
ceeds 
the 
dollar 
limit 
under 
section
411(a)(11)(A)’’ and inserting ‘‘exceeds the
amount that can be distributed without the par-
ticipant’s consent under section 411(a)(11)’’.
(2) Section 205(g) of the Employee Retirement
Income Security Act of 1974 is amended—
(A) in paragraph (1) by striking ‘‘exceed
the dollar limit under section 203(e)(1)’’ and
inserting ‘‘exceed the amount that can be dis-
121
tributed without the participant’s consent under
section 203(e)’’, and
(B) in paragraph (2)(A) by striking ‘‘ex-
ceeds the dollar limit under section 203(e)(1)’’
and inserting ‘‘exceeds the amount that can be
distributed without the participant’s consent
under section 203(e)’’.
(s) AMENDMENT RELATING TO SECTION 652 OF THE
ACT.—Section 404(a)(1)(D)(iv) is amended by striking
‘‘PLANS
MAINTAINED
BY
PROFESSIONAL
SERVICE
EM-
PLOYERS’’ and inserting ‘‘SPECIAL
RULE
FOR
TERMI-
NATING PLANS’’.
(t) AMENDMENTS RELATING TO SECTION 657 OF
THE ACT.—Section 404(c)(3) of the Employee Retirement
Income Security Act of 1974 is amended—
(1) by striking ‘‘the earlier of’’ in subparagraph
(A) the second place it appears, and
(2) by striking ‘‘if the transfer’’ and inserting
‘‘a transfer that’’.
(u) AMENDMENTS RELATING TO SECTION 659 OF
THE ACT.—
(1) Section 4980F is amended—
(A) in subsection (e)(1) by striking ‘‘writ-
ten notice’’ and inserting ‘‘the notice described
in paragraph (2)’’,