Special rules for distributions from qualified plans to which employee made deductible contributions
(1) Treatment of contributions
(1)Treatment of contributions#
For purposes of this section and sections 402 and 403, notwithstanding section 414(h), any deductible employee contribution made to a qualified employer plan or government plan shall be treated as an amount contributed by the employer which is not includible in the gross income of the employee.
(2)Repealed. Pub. L. 100–647, title I, § 1011A(c)(8) , Nov. 10, 1988 , 102 Stat. 3476 ]#
(3)Amounts constructively received#
(A) In general For purposes of this subsection, rules similar to the rules provided by subsection (p) (other than the exception contained in paragraph (2) thereof) shall apply.
(B) Purchase of life insurance To the extent any amount of accumulated deductible employee contributions of an employee are applied to the purchase of life insurance contracts, such amount shall be treated as distributed to the employee in the year so applied.
(3)(A)In general#
For purposes of this subsection, rules similar to the rules provided by subsection (p) (other than the exception contained in paragraph (2) thereof) shall apply.
(3)(B)Purchase of life insurance#
To the extent any amount of accumulated deductible employee contributions of an employee are applied to the purchase of life insurance contracts, such amount shall be treated as distributed to the employee in the year so applied.
(4)Special rule for treatment of rollover amounts#
For purposes of sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16), the Secretary shall prescribe regulations providing for such allocations of amounts attributable to accumulated deductible employee contributions, and for such other rules, as may be necessary to insure that such accumulated deductible employee contributions do not become eligible for additional tax benefits (or freed from limitations) through the use of rollovers.
(5)Definitions and special rules#
For purposes of this subsection—
(A) Deductible employee contributions The term “deductible employee contributions” means any qualified voluntary employee contribution (as defined in section 219(e)(2)) made after December 31, 1981 , in a taxable year beginning after such date and made for a taxable year beginning before January 1, 1987 , and allowable as a deduction under section 219(a) for such taxable year.
(B) Accumulated deductible employee contributions The term “accumulated deductible employee contributions” means the deductible employee contributions— (i) increased by the amount of income and gain allocable to such contributions, and (ii) reduced by the sum of the amount of loss and expense allocable to such contributions and the amounts distributed with respect to the employee which are attributable to such contributions (or income or gain allocable to such contributions).
(C) Qualified employer plan The term “qualified employer plan” has the meaning given to such term by subsection (p)(3)(A)(i).
(D) Government plan The term “government plan” has the meaning given such term by subsection (p)(3)(B).
(5)(A)Deductible employee contributions#
The term “deductible employee contributions” means any qualified voluntary employee contribution (as defined in section 219(e)(2)) made after December 31, 1981 , in a taxable year beginning after such date and made for a taxable year beginning before January 1, 1987 , and allowable as a deduction under section 219(a) for such taxable year.
(5)(B)Accumulated deductible employee contributions#
(6)Ordering rules#
Unless the plan specifies otherwise, any distribution from such plan shall not be treated as being made from the accumulated deductible employee contributions, until all other amounts to the credit of the employee have been distributed.