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TITLE 26-INTERNAL REVENUE CODE "(A) Period for rollover contribution.-In the case of a payment described in section 402(a)(5)(A) (subsec. (a)(5)(A) of this section] (other than a payment described In section 402(a)(5)(A) as in effect on the day before the date of the enactment of this Act) [Apr. 15, 1976] or section 403(a)(4)(A) (other than a payment described in section 403(a)(4)(A) as in effect on the day before the date of the enactment of this Act [Apr. 15, 1976] of the Internal Revenue Code of 1954 [section 403(a)(4)(A) of this title] (relating to distributions of the balance to the credit of the employee) which is contributed by an employee after the date of the enactment of this Act [Apr. 15, 1976] to a trust, plan, account, annuity, or bond described in section 402(a)(5)(B) or 403(a)(4)(B) of such Code, [subsec. (a)(5)(B) of this section or section 403(a)(4)(B) of this title], the applicable period specified in section 402(a)(5)(B) or 403(a)(4)(B) of such Code (relating to rollover distributions to an- other plan or retirement account) shall not expire before December 31, 1976. "(B) Time of contribution.- (I) General rule.-If the initial portion of a payment the applicable period for which is de- termined under subparagraph (A) is contributed before December 31, 1976, by an individual to a trust, plan, account, annuity, or bond described in subparagraph (A) and the remaining portion of such payment is contributed by such individ- ual to such a trust, plan, account, annuity, or bond not later than 30 days after the date a credit or refund is allowed by the Secretary of the Treasury or his delegate under section 6402 of the Internal Revenue Code of 1954 [section 6402 of this title] with respect to the contribu- tion. then, for purposes of subparagraph (A) and sections 402(a)(5) and 403(a)(4) of such Code subsec. (a)(5) of this section and section 403(a)(4) of this title], at the election of the indi- vidual (made in accordance with regulations pre- scribed by the Secretary or his delegate), such remaining portion shall be considered to have been contributed on the date the initial portion of the payment was contributed. For purposes of this subparagraph, the initial portion of a pay- ment is the amount by which such payment ex- ceeds the amount el the tax imposed on such payment by chapter 1 of such Code (determined without regard to this subparagraph). [chapter 1 of this title] "(ii) Regulations.-For purposes of this subpar- agraph, the tax imposed on a payment by chap- ter 1 of the Internal Revenue Code of 1954 [chapter 1 of this title], and the date a credit or refund is allowed by the Secretary of the Trea- sury or his delegate under section 6402 [section 6402 of this title] with respect to a contribution, shall be determined under regulations prescribed by the Secretary of the Treasury or his delegate. "(C) Period of limitations.-If an individual has made the election provided by subparagraph (B), then- "(i) the period provided by the Internal Rev- enue Code of 1954 [this title] for the assessment of any deficiency for the taxable year in which the payment described in subparagraph (A) was made and each subsequent taxable year for which tax is determined by reference to the treatment of such payment under such Code or the status under such Code of any trust, plan, account, annuity, or bond described in subpara- graph (A) shall, to the extent attributable to such treatment, not expire before the expiration of 3 years from the date the Secretary of the Treasury or his delegate Is notified by the indi- vidual (in such manner as the Secretary of the Treasury or his delegate may prescribe) that such individual has made (or failed to make) the contribution of the remaining portion of the payment within the period specified in subpara- graph (B)(i), and "(ii) such deficiency may be assessed before the expiration of such 3-year period notwith- standing the provisions of section 6212(c) of such Code (section 6212(c) of this title] or the provi- sions of any other law or rule of law which would otherwise prevent such assessment. "(2) Rollover contribution for certain property sold.-Sections 402(a)(5)(C) and 403(a)(4)(C) of the Internal Revenue Code of 1954 [subsec. (a)(5)(C) of this section and section 403(a)(4)(C) of this title] (re- lating to the requirement that rollover amount must consist of property received in a distribution) shall not apply with respect to that portion of the proper- ty received in a payment described in section 402(a)(5)(A) (subsec. (a)(5)(A) of this section] (other than a payment described in section 402(a)(5)(A) as in effect on the day before the date of the enact- ment of this Act [Apr, 15, 1976] or 403(a)(4)(A) (other than a payment described in section 403(a)(4)(A) as in effect on the day before the date of the enactment of this Act) [Apr. 15, 1976) of such Code [section 403(a)(4)(A) of this title] which is sold or exchanged by the employee on or before the date of the enactment of this Act, [Apr. 15, 1976], if the employee transfers an amount of cash equal to the proceeds received from the sale or exchange of such property in excess of the amount considered contrib- uted by the employee (within the meaning of section 402(a)(4)(D)(i) of such Code) [subsec. (a)(4)(D)(i) of this section]. "(3) Nonrecognition of gain or loss.-For purposes of the Internal Revenue Code of 1954 [this title] no gain or loss shall be recognized with respect to the sale or exchange of property described in paragraph (2) If the proceeds of such sale or exchange are transferred by an employee in accordance with this subsection and the applicable provisions of section 402(a)(5) or 403(a)(4) of such Code. (subsec. (a)(5) of this section and section 403(a)(4) of this title]." CROSS REFERENCES Limitation on retirement income inapplicable to any amount excluded under this section, see section 37 of this title. SECTIoN REFERRED TO IN OTHER SEcTIONS This section is referred to in sections 37, 46. 50A, 56, 62, 101, 219, 220, 401, 403, 405 to 409, 415, 871, 901, 911, 1348, 1379, 1441, 2039, 4973 of this title. § 403. Taxation of employee annuities (a) Taxability of beneficiary under a qualified annu- ity plan (I) General rule Except as provided in paragraph (2), If an annuity contract is purchased by an employer for an employee under a plan which meets the requirements of section 404(a)(2) (wheth- er or not the employer deducts the amounts paid for the contract under such section), the employee shall include in his gross income the amounts received under such contract for the year received as provided in section 72 (relating to annuities). (2) Capital gains treatment for certain distributions (A) General rule If- (I) an annuity contract is purchased by an employer for an employee under a plan described in paragraph (1); (ii) such plan requires that refunds of contributions with respect to annuity con- tracts purchased under such plan be used Page 302 §403