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TITLE 26-INTERNAL REVENUE CODE though the amounts calculated under clauses (i) and (iii) of subparagraph (C) were zero. (3) Actuarial adjustment For purposes of this section, in the case of any defined benefit plan, if an employee's ac- crued benefit is to be determined as an amount other than an annual benefit com- mencing at normal retirement age, or if the accrued benefit derived from contirbutions made by an employee is to be determined with respect to a benefit other than an annual benefit in the form of a single life an- nuity (without ancillary benefits) commenc- ing at normal retirement age, the employee's accrued benefit, or the accrued benefits de- rived from contributions made by an employ- ee, as the case may be, shall be the actuarial equivalent of such benefit or amount deter- mined under paragraph (1) or (2). (d) Special rules (1) Coordination with section 401(a)(4) A plan which satisfies the requirements of this section shall be treated as satisfying any vesting requirements resulting from the ap- plication of section 401(a)(4) unless- (A) there has been a pattern of abuse under the plan (such as a dismissal of em- ployees before their accrued benefits become nonforfeitable) tending to discrimi- nate in favor of employees who are officers, shareholders, or highly compensated, or (B) there have been, or there is reason to believe there will be, an accrual of benefits or forfeitures tending to discriminate in favor of employees who are officers, share- holders, or highly compensated. (2) Prohibited discrimination Subsection (a) shall not apply to benefits which may not be provided for designated employees in the event of early termination of the plan under provisions of the plan adopted pursuant to regulations prescribed by the Secretary to preclude the discrimination prohibited by section 401(a)(4). (3) Termination or partial termination; discontinu- ance of contributions Notwithstanding the provisions of subsec- tion (a), a trust shall not constitute a quail- fied trust under section 401(a) unless the plan of which such trust is a part provides that- (A) upon its termination or partial termi- nation, or (B) in the case of a plan to which section 412 does not apply, upon complete discon- tinuance of contributions under the plan, the rights of all affected employees to bene- fits accrued to the date of such termination, partial termination, or discontinuance, to the extent funded as of such date, or the amounts credited to the employees' accounts, are non- forfeitable. This paragraph shall not apply to benefits or contributions which, under provi- sions of the plan adopted pursuant to regula- tions prescribed by the Secretary to preclude the discrimination prohibited by section 401(a)(4), may not be used for designated em- ployees in the event of early termination of the plan. (4) Class year plans The requirements of subsection (a)(2) shall be deemed to be satisfied in the case of a class year plan if such plan provides that 100 per- cent of each employee's right to or derived from the contributions of the employer on his behalf with respect to any plan year are non- forfeitable not later than the end of the 5th plan year following the plan year for which such contributions were made. For purposes of this section, the term "class year plan" means a profit-sharing, stock bonus, or money purchase plan which provides for the sepa- rate nonforfeitability of employees' rights to or derived from the contributions for each plan year. (5) Treatment of voluntary employee contributions In the case of a defined benefit plan which permits voluntary employee contributions, the portion of an employee's accrued benefit derived from such contributions shall be treated as an accrued benefit derived from employee contributions under a plan other than a defined benefit plan. (6) Accrued benefit not to be decreased by amend- ment A plan shall be treated as not satisfying the requirements of this section if the accrued benefit of a participant is decreased by an amendment of the plan, other than an amendment described in section 412(c)(8). (e) Application of vesting standards to certain plans (1) The provisions of this section (other than paragraph (2)) shall not apply to- (A) a governmental plan (within the meaning of section 414(d)), (B) a church plan (within the meaning of section 414(e)) with respect to which the election provided by section 410(d) has not been made, (C) a plan which has not, at any time after September 2, 1974, provided for em- ployer contributions, and (D) a plan established and maintained by a society, order, or association described in section 501(c)(8) or (9), if no part of the contributions to or under such plan are made by employers of participants in such plan. (2) A plan described in paragraph (1) shall be treated as meeting the requirements of this section, for purposes of section 401(a), if such plan meets the vesting requriements re- sulting from the application of sections 401(a)(4) and 401(a)(7) as in effect on Sep- tember 1, 1974. (Added Pub, L. 93-406, title II, § 1012(a), Sept. 2, 1974, 88 Stat. 901, and amended Pub. L. 94- 455, title XIX, §§ 1901(a)(62), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1774, 1834.) REFERENCES IN TEXT The Social Security Act, referred to in subsecs. (a)(9) and (b)(1)(0), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title II of the Social Security Act is clas- sified generally to subchapter II (§ 401 et seq.) of " itle 42, The Public Health and Welfare. For complete :as- sification of this Act to the Code, see section 1305 of Title 42, and Tables volume. Page 331