CHAPTER 23

FORMERLY

HOUSE BILL NO. 129

AS AMENDED BY HOUSE AMENDMENT NO. 3

AN ACT TO AMEND CHAPTER 11, TITLE 30 OF THE DELAWARE CODE BY IMPOSING INCOME TAX AT A LOWER RATE ON LUMP SUM DISTRIBUTIONS FROM PENSION PLANS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Section 1102, Chapter 11, Title 30, Delaware Code, by redesignating subsection (b) thereof as subsection (c), and adding a new subsection (b) as follows:

"(b) Imposition of separate tax on lump-sum distributions:

(1) In addition to the tax imposed under subsection (a) hereof, there is hereby imposed a separate tax in the amount determined in paragraph (2) of this subsection, on the ordinary income portion of a lump-sum distribution received by every resident individual, estate or trust.

(2) The amount of the tax imposed by this subaention for any taxable %rear shall be an amount equal to the amount- or the initial separate' tax taxable Such year, multiplied by a fraction, the numerator of which is the ordinary income portion of a lump-sum distribution for the taxable year, and the denominator of which is the total taxable amount of such distribution for such year.

(3) The initial separate tax for any taxable year is an amount equal to ten times the tax which would be imposed by subsection (a) of this section if the taxable income referred to were equal to one- tenth of the total taxable amount of the lump-sum distributed for the taxable year.

(4) The recipient of a lump-sum distribution shall be liable for the tax imposed by this subsection.

(5) For purposes of this subsection the rules concerning multiple distributions and distributions of annuity contracts as specified in Section 402 (eX2) of the Internal Revenue Code shall be applicable.

(6) For purposes of this subsection the definition and special rules applying to the tax on lump-sum distributions as specified in Section 402 (eX4) of the Internal Revenue Code shall be applicable.

(7) For purposes of this subsection the rules relating to roll- over as specified in Section 402(a)(5), (6), and (7) of the Internal Revenue Code shall be applicable."

Section 2. Amend §1108, Chapter 11, Title 30 of the Delaware Code by striking paragraph (3) of subsection (a) thereof in its entirety.

Section 3. This Act shall be applicable to lump sum distributions on or after December 30, 1977.

Approved April 10, 1979