(i) In general
In the taxable year when paid, if the contributions are paid
into a stock bonus or profit-sharing trust, and if such taxable
year ends within or with a taxable year of the trust with respect
to which the trust is exempt under section 501(a), in an amount
not in excess of the greater of -
(I) 25 percent of the compensation otherwise
paid or accrued during the taxable year to the beneficiaries
under the stock bonus or profit-sharing plan, or
(II) the amount such employer is required
to contribute to such trust under section 401(k)(11) for such
year.
(ii) Carryover of excess contributions
Any amount paid into the trust in any taxable year in excess
of the limitation of clause (i) (or the corresponding provision
of prior law) shall be deductible in the succeeding taxable
years in order of time, but the amount so deductible under this
clause in any 1 such succeeding taxable year together with the
amount allowable under clause (i) shall not exceed the amount
described in subclause (I) or (II) of clause (i), whichever
is greater, with respect to such taxable year.
(iii) Certain retirement plans excluded
For purposes of this subparagraph, the term ''stock bonus or
profit-sharing trust'' shall not include any trust designed
to provide benefits upon retirement and covering a period of
years, if under the plan the amounts to be contributed by the
employer can be determined actuarially as provided in paragraph
(1).
(iv) 2 or more trusts treated as 1 trust
If the contributions are made to 2 or more stock bonus or profit-sharing
trusts, such trusts shall be considered a single trust for purposes
of applying the limitations in this subparagraph.
(v) DEFINED CONTRIBUTION PLANS SUBJECT TO
THE FUNDING STANDARDS- Except as provided by the Secretary,
a defined contribution plan which is subject to the funding
standards of section 412 shall be treated in the same manner
as a stock bonus or profit-sharing plan for purposes of this
subparagraph.'.
(I) In general
The limitation of clause (i) for any taxable year shall be
increased by the unused pre-87 limitation carryforwards (but
not to an amount in excess of 25 percent of the compensation
described in clause (i)).
(II)Unused pre-87 limitation carryforwards
For purposes of subclause (I), the term ''unused pre-87 limitation
carryforwards'' means the amount by which the limitation of
the first sentence of this subparagraph (as in effect on the
day before the date of the enactment of the Tax Reform Act
of 1986) for any taxable year beginning
before January 1, 1987, exceeded the amount paid to the trust
for such taxable year (to the extent such excess was not taken
into account in prior taxable years).
