after subparagraph (B) the following new subparagraph: (C) a distribution from a qualified cash or deferred arrangement (as defined in section 401(k)(2)), an annuity contract described in section 403(b), an eligible deferred compensation plan described in section 457(b) which is maintained by an eligible employer described in section 457(e)(1)(A), or an individual retirement account (as defined in section 408(a)) which is excluded from gross income of the distributee under section 402(m) (other than any portion of such a distribution which is attributable to the repayment of a loan described in section 72(t)(7)(C)), and . (B) Coordination with waiver of penalty Subparagraph (B) of section 72(t)(7) is amended by inserting (without regard to subparagraph (C) thereof) before the period. (2) Deduction for interest on education loans Paragraph (1) of section 221(e) of such Code is amended by inserting before the period at the end the following: , or for any amount paid with a distribution which is excluded from gross income under section 402(m) . (c) Effective date The amendment made by this section shall apply to distributions made after the date of the enactment of this Act. 6. Inclusion of employer student loan payments in educational assistance programs (a) In general Paragraph (1) of section 127(c) of the Internal Revenue Code of 1986 is amended— (1) by striking and at the end of subparagraph (A), (2) by adding and at the end of subparagraph (B), and (3) by inserting after subparagraph (B) the following new subparagraph: (C) the payment, by an employer, of amounts in repayment of any loan made to the employee to assist the employee in attending an educational organization described in section 170(b)(1)(A)(ii), . (b) Denial of double benefit Paragraph (1) of section 221(e) of the Internal Revenue Code of 1986, as amended by section 4, is further amended by inserting which is excluded from gross income under section 127 or is after or for any amount . (c) Effective date The amendments made by this section shall