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to the amendment, whenever the employee had an unrestricted right
to withdraw his plan benefits, the benefits would be taxable to
the employee in that year even though the employee had not
actually reduced the benefits to his possession"), affd. without
published opinion 91 F.3d 170 (Fed. Cir. 1996).
Further insight into the meaning of the "actually
distributed" requirement of section 402(a)(1) is provided by
H. Conf. Rept. 97-215, at 239-240 (1981), 1981-2 C.B. 481, 503:
Under the House Bill, benefits under a qualified
plan (including deductible employee contributions and
earnings thereon) are taxed only when paid to the
employee or a beneficiary and are not taxed if merely
made available. Of course, as under present law, if
benefits are paid with respect to an employee to a
creditor of the employee, a child of the employee,
etc., the benefits paid would be treated as if paid to
the employee.
Given the aforementioned history of section 402(a)(1), we
conclude that the term "actually distributed" includes the
situation herein where funds were paid out of the tax-exempt
trust. In amending section 402(a)(1), the Congress intended to
address situations where an employee could be taxed on pension
funds before their distribution. The change was not directed at
situations where the funds were disbursed from the qualified
trust. This conclusion is supported by the Congress' intent to
treat payments to an employee's creditors, etc., as if the
payments were made directly to the employee. In this case, when
the plan disbursed these funds to the temporary administrator, a
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