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TITLE 26-INTERNAL REVENUE CODE to reduce subsequent premiums on the contracts under the plan; and (iii) a lump sum distribution (as defined in section 402(e)(4)(A)) is paid to the re- cipient, so much of the total taxable amount (as de- fined in section 402(e)(4)(D)) of such distri- bution as is equal to the product of such total taxable amount multiplied by the frac- tion described in section 402(a)(2) shall be treated as a gain from the sale or exchange of a capital asset held for more than 9 months. For purposes of this paragraph, in the case of an individual who is an employ- ee without regard to section 401(c)(1), de- termination of whether or not any distribu- tion is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e)(4)(B) of section 402, but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph. (B) Cross reference For Imposition of separate tax on ordinary income portion of lump sum distribution, see section 402(e). (3) Self-employed individuals For purposes of this subsection, the term "employee" includes an individual who is an employee within the meaning of section 401(c)(1), and the employer of such individual is the person treated as his employer under section 401(c)(4). (4) Rollover amounts In the case of an employee annuity de- scribed in 403(a), if- (A) the balance to the credit of an em- ployee is paid to him- (i) within one taxable year of the em- ployee on account of a termination of the plan of which such trust is a part or, in the case of a profit-sharing plan, a com- plete discontinuance of contributions under such plan, or (ii) in one or more distributions which constitutes a lump-sum distribution within the meaning of section 402(e)(4)(A) (determined without refer- ence to section 402(e)(4)(B)). (B)(i) the employee transfers all the prop- erty he receives in such distribution to an individual account described in section 408(a), an individual retirement annuity de- scribed in section 408(b) (other than an en- dowment contract), or a retirement bond described in section 409, on or before the 60th day after the day on which he received such property to the extent the fair market value of such property exceeds the amount referred to in section 402(e)(4)(D)(i), or (ii) the employee transfers all the proper- ty he receives in such distribution to an em- ployees' trust described in section 401(a) which is exempt from tax under section 501(a), or to an annuity plan described in subsection (a) on or before the 60th day after the day on which he received such property to the extent the fair market value of such property exceeds the amount referred to in section 402(e)(4)(D)(i), and (C) the amon t so transferred consists of the property distributed to the extent that the fair market value of such property does not exceed the amount required to be trans- ferred pursuant to subparagraph (B), then such distribution is not includible in gross income for the year in which paid. For purposes of this title, a transfer described in subparagraph (B)(i) shall be treated as a rol- lover contribution described in section 408(d)(3). Subparagraph (B)(ii) does not apply in the case of a transfer to an employ- ees' trust, or annuity plan if any part of a payment described in subparagraph (A) is at- tributable to an annuity plan under which the employee was an employee within the meaning of section 401(c)(1) at the time con- tributions were made on his behalf under the plan. (5) Special roilover rules For purposes of paragraph (4)(A)(i)- (A) Time of termination A complete discontinuance of contribu- tions under a profit-sharing plan shall be deemed to occur on the day the plan admin- istrator notifies the Secretary (in accor- dance with regulations prescribed by the Secretary) that all contributions to the plan have been completely discontinued. For purposes of section 411(d)(3), the plan shall be considered to be terminated no later than the day such notice is filed with the Secretary. (B) Sale of subsidiary or assets (I) A payment of the balance to the credit of an employee of a corporation (hereinafter referred to as the employer corporation) which is a subsidiary corpo- ration (within the meaning of section 425(f)) or which is a member of a con- trolled group of corporations (within the meaning of section 1563(a), determined by substituting "50 percent" for "80 percent" each place it appears therein) in connec- tion with the liquidation, sale, or other means of terminating the parent-subsid- iary or controlled group relationship of the employer corporation with the parent corporation or controlled group, or (ii) A payment of the balance to the credit of an employee of a corporation (hereinafter referred to as the acquiring corporation) in connection with the sale or other transfer to the acquiring corpora- tion of all or substantially all of the assets used by the previous employer of the em- ployee (hereinafter referred to as the sell- ing corporation) in a trade or business conducted by the selling corporation, shall be treated as a paynfent or distribu- tion on account of the the I termination of the plan with respect to such employee if the employees of the employer corporation or the acquiring corporation (whichever ap- plies) are not active participants in such plan at the time of such payment or distri- bution. For purposes of this subparagraph, in no event shall a payment or distribution be deemed to be in accordance with a sale or other transfer of assets, or a liquidation, Page 303 § 403