88 STAT. 938 Ante, p. 937. 42 USC 401. Supra. Ante, p. 901. 26 USC 401. Pub. Law 93-406 - 110 September 2, 1974 "(A) the date on which the participant attains the earlier of age 65 or the normal retirement age specified under the plan, "(B) occurs the 10th anniversary of the year in which the participant commenced participation in the plan, or "(C) the participant terminates his service with the employer. In the case of a plan which provides for the payment of an early retirement benefit, a trust forming a part of such plan shall not constitute a qualified trust under this section unless a participant who satisfied the service requirements for such early retirement benefit, but separated from the service (with any nonforfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially, reduced under regulations prescribed by the Secretary or his delegate." (e) REQUIREMENT THAT PLAN BENEFITS ARE NOT DECREASED BY CERTAIN SOCIAL SECURITY INCREASES.-Section 401(a) is amended by inserting after paragraph (14) the following new paragraph: "(15) a trust shall not constitute a qualified trust under this section unless under the plan of which such trust is a part "(A) in the case of a participant or beneficiary who is receiving benefits under such plan, or "(B) in the case of a participant who is separated from the service and who has nonforfeitable rights to benefits, such benefits are not decreased by reason of any increase in the benefit levels payable under title II of the Social Security Act or any increase in the wage base under such title II, if such increase takes place after the date of the enactment of the Employee Retirement Income Security Act of 1974 or (if later) the earlier of the date of first receipt of such benefits or the date of such separation, as the case may be." (f) REQUIREMENT OF NONFORFEITABILITY IN CASE OF CERTAIN WITHDRAWALS.-Section 401(a) is amended by inserting after paragraph (18) the following new paragraph: "(19) A trust shall not constitute a qualified trust under this section if under the plan of which such trust is a part any part of a participant's accrued benefit derived from employer contributions (whether or not otherwise nonforfeitable), is forfeitable solely because of withdrawal by such participant of any amount attributable to the benefit derived from contributions made by such participant. The preceding sentence shall not apply to the accrued benefit of any participant unless, at the time of such withdrawal, such participant has a nonforfeitable right to at least 50 percent of such accrued benefit (as determined under section 411). The first sentence of this paragraph shall not apply to the extent that an accrued benefit is permitted to be forfeited in accordance with section 411(a)(3)(D) (iii) (relating to proportional forfeitures of benefits accrued before enactment of the Employee Retirement Income Security Act of 1974, in the event of withdrawal of certain mandatory contributions)." SEC. 1022. MISCELLANEOUS PROVISIONS. (a) REQUIREMENT THAT PLAN NOT BE DISCRIMINATORY.-Section 401 (a) (4) (disqualifying discriminatory plans) is amended to read as follows: September 2, 1974 - 111 Pub. Law 93-406 "(4) If the contributions or the benefits provided under the plan do not discriminate in favor of employees who are (A) officers, "(B) shareholders, or "(C) highly compensated. For purposes of this paragraph, there shall be excluded from 88 STAT. 939 consideration employees described in section 410(b)(2) (A) and Ante, p. 898. (C)." (b) AMENDMENTS RELATING TO SELF-EMPLOYED INDIVIDUALS AND OWNER-EMPLOYEES.— (1) AMENDMENT OF SECTION (401) (a) (10).—So much of sub paragraph (A) of section 401(a)(10) as precedes clause (i) 26 USC 401. thereof is amended to read as follows: "(A) paragraph (3), the first and second sentences of paragraph (5), and section 410 shall not apply, but-". (2) AMENDMENT OF SECTION (401) (d) (3).—Section 401 (d) (3) (relating to additional requirements for qualification of trusts and and plans benefiting owner-employees) is amended to read as follows: "(3) (A) The plan benefits each employee having 3 or more years of service (within the meaning of section 410(a) (3)). "(B) For purposes of subparagraph (A), the term 'employee' does not include "(i) any employee included in a unit of employees covered by a collective-bargaining agreement described in section 410(b) (2) (A), and "(ii) any employee who is a nonresident alien individual described in section 410(b) (2) (C).” ,, (c) PERSONS OTHER THAN BANKS MAY BE TRUSTEES OF TRUSTS BENEFITTING OWNER-EMPLOYEES.— (1) The first sentence of section 401 (d) (1) is amended to read as follows: "In the case of a trust which is created on or after October 10, 1962, or which was created before such date but is not exempt from tax under section 501(a) as an organization 26 USC 501. described in subsection (a) on the day before such date, the assets thereof are held by a bank or other person who demonstrates to the satisfaction of the Secretary or his delegate that the manner in which he will administer the trust will be consistent with the requirements of this section. A trust shall not be disqualified under this paragraph merely because a person (including the employer) other than the trustee or custodian so administering the trust may be granted, under the trust instrument, the power to control the investment of the trust funds either by directing investments (including reinvestments, disposals, and exchanges) or by disapproving proposed investments (including reinvestments, disposals, or exchanges)." (2) The second sentence of section 401(d)(1) is amended by striking out "the date of the enactment of this subsection" and inserting in lieu thereof "October 10, 1962,". (d) CERTAIN CUSTODIAL ACCOUNTS.-Effective as of January 1, 26 USC 401 1974, subsection (f) of section 401 (relating to certain custodial note. accounts) is amended to read as follows: "(f) CERTAIN CUSTODIAL ACCOUNTS AND ANNUITY CONTRACTS.-For purposes of this title, a custodial account or an annuity contract shall be treated as a qualified trust under this section if— 88 STAT. 940 26 USC 403 and note. 26 USC 501. Ante, p. 939. 26 USC 851. 26 USC 401 and note. 12 USC 1752. 26 USC 6104. Pub. Law 93-406 - 112 September 2, 1974 "(1) the custodial account or annuity contract would, except for the fact that it is not a trust, constitute a qualified trust under this section, and "(2) in the case of a custodial account the assets thereof are held by a bank (as defined in subsection (d)(1)) or another person who demonstrates, to the satisfaction of the Secretary or his delegate, that the manner in which he will hold the assets will be consistent with the requirements of this section. For purposes of this title, in the case of a custodial account or annuity contract treated as a qualified trust under this section by reason of this subsection, the person holding the assets of such account or holding such contract shall be treated as the trustee thereof." (e) CUSTODIAL ACCOUNTS FOR REGULATED INVESTMENT COMPANY STOCK.-Effective as of January 1, 1974, section 403(b) (relating to taxability of beneficiary under annuity purchased by section 501 (c) (3) organization or public school) is amended by adding at the end thereof the following new paragraph: "(7) CUSTODIAL ACCOUNTS FOR REGULATED INVESTMENT COM PANY STOCK. "(A) AMOUNTS PAID TREATED AS CONTRIBUTIONS.-For purposes of this title, amounts paid by an employer described in paragraph (1)(A) to a custodial account which satisfies the requirements of section 401 (f) (2) shall be treated as amounts contributed by him for an annuity contract for his employee if the amounts are paid to provide a retirement benefit for that employee and are to be invested in regulated investment company stock to be held in that custodial account. "(B) ACCOUNT TREATED AS PLAN.-For purposes of this title, a custodial account which satisfies the requirements of section 401 (f) (2) shall be treated as an organization. described in section 401(a) solely for purposes of subchapter F and subtitle F with respect to amounts received by it (and income from investment thereof). “(C) REGULATED INVESTMENT COMPANY.-For purposes of this paragraph, the term 'regulated investment company' means a domestic corporation which is a regulated investment company within the meaning of section 851(a), and which issues only redeemable stock.’ (f) INSURED CREDIT UNIONS.-Effective as of January 1, 1974, the last sentence of section 401 (d) (1) is amended by striking out "section 581," and inserting in lieu thereof "section 581, an insured credit union (within the meaning of section 101 (6) of the Federal Credit Union Act),". (g) PUBLIC INSPECTION OF CERTAIN INFORMATION WITH RESPECT TO PENSION, PROFIT-SHARING, AND STOCK BONUS PLANS. (1) AMENDMENT OF SECTION 6104(a).-Paragraph (1) of section 6104 (a) (relating to public inspection of applications for tax exemption) is amended (A) by redesignating subparagraph (B) as subparagraph (D) and by inserting after subparagraph (A) the following new subparagraphs: "(B) PENSION, ETC., PLANS.-The following shall be open to public inspection at such times and in such places as the Secretary or his delegate may prescribe: "(i) any application filed with respect to the qualification of a pension, profit-sharing, or stock bonus plan under section 401(a), 403 (a), or 405(a), an individual 26 USC 401, retirement account described in section 408(a), or an 403, 405. individual retirement annuity described in section 408 (b), "(ii) any application filed with respect to the exemption from tax under section 501 (a) of an organization forming part of a plan or account referred to in clause (i), "(iii) any papers submitted in support of an application referred to in clause (i) or (ii), and "(iv) any letter or other document issued by the Except in the case of a plan participant, this subparagraph "(C) CERTAIN NAMES AND COMPENSATION NOT TO BE OPENED (B) The heading of subparagraph (A) of section 6104 (a) 26 USC 6104. (1) is amended to read as follows: "(A) ORGANIZATIONS DESCRIBED IN SECTION 501.-". (C) The heading of subparagraph (D) of section 6104(a) (1) as redesignated by subparagraph (A) of this paragraph is amended to read as follows: "(D) WITHHOLDING OF CERTAIN OTHER INFORMATION.-". (D) Subparagraph (D) of section 6104 (a) (1) (as so redesignated) is amended by striking out "subparagraph (A)" each place it appears and inserting in lieu thereof "subparagraph (A) or (B)”. (2) AMENDMENT OF SECTION 6104 (a) (2).—Subparagraph (A) of section 6104(a) (2) is amended by adding at the end thereof "any application referred to in subparagraph (B) of subsection (a)(1) of this section, and". (3) AMENDMENT OF SECTION 6104 (b).-Section 6104(b) (relating to inspection of annual information returns) is amended by striking out "and 6056" and inserting in lieu thereof "6956, and 6058". (4) EFFECTIVE DATE.-The amendinents made by this subsection 26 USC 6104 shall apply to applications filed (or documents issued) after the note. date of enactment of this Act. (h) PUBLICITY OF RETURNS.-Effective on the date of the enactment 26 USC 6103 and of this Act, section 6103 (relating to publicity of returns and disclosure note. of information as to persons filing income tax returns) is amended by "(1) returns with respect to any tax imposed by this title or information with respect to such returns to the proper officers and employees of the Department of Labor and the Pension Benefit 88 STAT. 942 Ante p. 832.. 26 USC 6057. Post, p. 947. 26 USC 501 and note. 26 USC 501. 26 USC 404 note. Guaranty Corporation for purposes of administration of Titles I and IV of the Employee Retirement Income Security Act of 1974, and "(2) registration statements (as described in section 6057) and information with respect to such statements to the proper officers and employees of the Department of Health, Education, and Welfare for purposes of administration of section 1131 of the Social Security Act." (i) CERTAIN PUERTO RICAN PENSION, ETC., PLANS TO BE EXEMPT FROM TAX UNDER SECTION 501 (a).— (1) GENERAL RULE.— -Effective for taxable years beginning after December 31, 1973, for purposes of section 501 (a) of the Internal Revenue Code of 1954 (relating to exemption from tax), any trust forming part of a pension, profit-sharing, or stock bonus plan all of the participants of which are residents of the Commonwealth of Puerto Rico shall be treated as an organization described in section 401 (a) of such Code if such trust (A) forms part of a pension, profit-sharing, or stock bonus plan, and (B) is exempt from income tax under the laws of the Commonwealth of Puerto Rico. (2) ELECTION TO HAVE PROVISIONS OF, AND AMENDMENTS MADE BY, TITLE II OF THIS ACT APPLY. (A) If the administrator of a pension, profit-sharing, or stock bonus plan which is created or organized in Puerto Rico elects, at such time and in such manner as the Secretary of the Treasury may require, to have the provisions of this paragraph apply, for plan years beginning after the date of election any trust forming a part of such plan shall be treated as a trust created or organized in the United States for purposes of section 401 (a) of the Internal Revenue Code of 1954. (B) An election under subparagraph (A), once made, is irrevocable. (C) This paragraph applies to plan years beginning after the date of enactment of this Act. (D) The source of any distributions made under a plan which makes an election under this paragraph to participants and beneficiaries residing outside of the United States shall be determined, for purposes of subchapter N of chapter 1 of the Internal Revenue Code of 1954, by the Secretary of the Treasury in accordance with regulations prescribed by him. For purposes of this subparagraph the United States means the United States as defined in section 7701(a)(9) of the Internal Revenue Code of 1954. (j) YEAR OF DEDUCTION FOR CERTAIN EMPLOYER CONTRIBUTIONS FOR SEVERANCE PAYMENTS REQUIRED BY FOREIGN LAW.-Effective for taxable years beginning after December 31, 1973, if— (1) an employer is engaged in a trade or business in a foreign country, (2) such employer is required by the laws of that country to make payments, based on periods of service, to its employees or their beneficiaries after the employees' retirement, death, or other separation from the service, and (3) such employer establishes a trust (whether organized |