; and (4) by adding at the end the following new subparagraph: (B) Exchanges to subsequent contracts If— (i) payments described in paragraph (2)(D) are being made from an annuity contract, (ii) an exchange of all or a portion of such contract for another contract is made under section 1035, and (iii) the aggregate distributions from the contracts involved in the exchange continue to satisfy the requirements of paragraph (2)(D) as if the exchange had not taken place, such exchange shall not be treated as a modification under subparagraph (A)(ii), and compliance with paragraph (2)(D) shall be determined on the basis of the combined distributions described in clause (iii). . (c) Information reporting Section 6724 is amended by inserting at the end the following new subsection: (g) Special rule for reporting certain additional taxes No penalty shall be imposed under section 6721 or 6722 if— (1) a person makes a return or report under section 6047(d) or 408(i) with respect to any distribution, (2) such distribution is made following a rollover, transfer, or exchange described in section 72(t)(4)(C) or section 72(q)(3)(C), (3) in making such return or report the person relies upon a certification provided by the taxpayer that the distributions satisfy the requirements of section 72(t)(4)(C)(iii) or section 72(q)(3)(B)(iii), as applicable, and (4) such person does not have actual knowledge that the distributions do not satisfy such requirements. . (d) Safe harbor for annuity payments (1) Qualified retirement plans Subparagraph (A) of section 72(t)(2) is amended by adding at the end the following flush sentence: For purposes of clause (iv), periodic payments shall not fail to be treated as substantially equal merely because they are amounts received as an annuity, and such periodic payments shall be deemed to be substantially equal if they are payable over a period described in clause (iv) and satisfy the requirements applicable to annuity payments under section 401(a)(9). . (2) Other annuity contracts Paragraph (2) of