Section of the Internal Revenue Code, relating to annuities, certain proceeds of endowment and life insurance contracts, is modified as follows: (

a) The amendments and transitional rules made by Public Law 99-514 shall be applicable to this part for the same transactions and the same years as they are applicable for federal purposes, except that the repeal of

Section 72(

d) of the Internal Revenue Code, relating to repeal of special rule for employees’ annuities, shall apply only to the following:

(1) Any individual whose annuity starting date is after December 31, 1986.

(2) At the election of the taxpayer, any individual whose annuity starting date is after July 1, 1986, and before January 1, 1987. (

b) The amount of a distribution from an individual retirement account or annuity or employee trust or employee annuity that is includable in gross income for federal purposes shall be reduced for purposes of this part by the lesser of either of the following:

(1) An amount equal to the amount includable in federal gross income for the taxable year.

(2) An amount equal to the basis in the account or annuity allowed by

Section 17507 (relating to individual retirement accounts and simplified employee pensions), the increased basis allowed by Sections and 17506 (relating to plans of self-employed individuals), the increased basis allowed by

Section 17501, or the increased basis allowed by

Section that is remaining after adjustment for reductions in gross income under this provision in prior taxable years. (c)

(1) Except as provided in paragraph (2), the amount of the additional tax imposed under this part shall be computed in accordance with Sections 72(m), (q), (t), and (

v) of the Internal Revenue Code, as applicable for federal income tax purposes for the same taxable year, using a rate of 2 1 percent, in lieu of the rate provided in those sections.

(2) In the case where

Section 72(t)(6) of the Internal Revenue Code, relating to special rules for simple retirement accounts, as applicable for federal income tax purposes for the same taxable year, applies, the rate in paragraph (1) shall be percent in lieu of the 2 1 percent rate specified therein. (

d) Section 72(f)(2) of the Internal Revenue Code shall be applicable without applying the exceptions which immediately follow that paragraph. (

e) The amendments made by

Section of the federal Pension Protection Act of 2006 (Public Law 109-280) to

Section 72(

e) of the Internal Revenue Code, shall not apply. (

f) For purposes of this part,

Section 2202(

b) of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), relating to loans from qualified plans shall apply. (

g) For purposes of this part,

Section 302(

c) of Title III of the Consolidated Appropriations Act, 2021 (Public Law 116-260), relating to loans from qualified plans, shall apply.