,,ii  #aaf? ,,congress  #b;d ,session   
,s4 #ccda  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,febru>y #bg1 #bjbj,mr4
 ,van ,holl5 7= ,mr4 ,s&]s 7= himself & 
,mr4 ,van ,holl577 introduc$ ! foll[+   
bill2 :i* 0 read twice & ref]r$ to !    
,committee on ,f9ance  ,a ,,bill  ,to   
am5d ! ,int]nal ,rev5ue ,code ( #aihf to
 re/rict ! tax b5efits ( executive      
def]r$ comp5sation & increase           
disclosure1 & = o!r purposes4  #a4 ,%ort
 title ,?is ,act may be cit$ z ! ,,ceo &
 ,work] ,p5sion ,fairness ,act4  #b4    
,nonqualifi$ def]r$ comp5sation  7a7 ,9 
g5]al ,section #dji;,a ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$ to read z
 foll[s3  #dji;,a4 ,nonqualifi$ def]r$  
comp5sation  7a7 ,9 g5]al ,except z     
o!rwise provid$ 9 subsection 7c71 any   
comp5sation :i* is def]r$ "u a          
nonqualifi$ def]r$ comp5sation plan %all
 be includible 9 ! gross income ( !     
p]son :o p]=m$ ! s]vices to :i* su*     
comp5sation relates 9 ! cal5d> ye> :5   
!re is no sub/antial risk ( =feiture ( !

 rights ( su* p]son to su* comp5sation4 
7b7 ,def9itions ,= purposes ( ?is       
section-- 7#a7 ,sub/antial risk (       
=feiture ,! rights ( a p]son to         
comp5sation %all be treat$ z subject to 
a sub/antial risk ( =feiture only if su*
 p]son's rights to su* comp5sation are  
condition$ ^u ! future p]=mance (       
sub/antial s]vices by any p]son4 ,su*   
rights %all n be treat$ z subject to a  
sub/antial risk ( =feiture solely by    
reason ( a cov5ant n to compete or !    
occurr5ce ( a condition relat$ to a     
purpose ( ! comp5sation o!r ?an ! future
 p]=mance ( s]vices4  7#b7 ,nonqualifi$ 
def]r$ comp5sation plan ,! t]m          
nonqualifi$ def]r$ comp5sation plan     
means any plan :i* provides = ! def]ral 
( comp5sation1 o!r ?an-- 7,a7 a qualifi$
 employ] plan1  7,b7 any bona fide      
vacation leave1 sick leave1 comp5satory 
"t1 disability pay1 or dea? b5efit plan1
 &  7,c7 any o!r plan or arrangem5t     
designat$ by ! ,secret>y consi/5t ) !   
purposes ( ?is section4  7#c7 ,qualifi$ 

employ] plan ,! t]m qualifi$ employ]    
plan means any plan1 contract1 p5sion1  
acc\nt1 or tru/ describ$ 9 section      
#djh7p77#b77;,d77ii7 or a simple        
retirem5t acc\nt 7)9 ! mean+ ( section  
#djh7p774  7#d7 ,plan includes          
arrangem5ts1 etc ,! t]m plan includes   
any agreem5t or arrangem5t1 includ+ an  
agreem5t or arrangem5t :i* includes only
 #a p]son4  7#e7 ,exception ,comp5sation
 %all n be treat$ z def]r$ if ! s]vice  
provid] receives paym5t ( su*           
comp5sation n lat] ?an #b mon?s aft] !  
end ( ! taxable ye> ( ! s]vice recipi5t 
dur+ :i* ! "r to ! paym5t ( su*         
comp5sation is no long] subject to a    
sub/antial risk ( =feiture4  7#f7       
,treatm5t ( e>n+s ,ref]5ces to def]r$   
comp5sation %all be treat$ z includ+    
ref]5ces to income 7:e!r actual or      
notional7 attributable to su*           
comp5sation or su* income4  7#g7        
,treatm5t ( qualifi$ /ock ,an arrangem5t
 "u :i* an employee may receive qualifi$
 /ock 7z def9$ 9 section #hc7;i77#b77   

%all n be treat$ z a nonqualifi$ def]r$ 
comp5sation plan ) respect to su*       
employee solely because ( su* employee's
 election1 or ability to make an        
election1 to def] recognition ( income  
"u section #hc7;i74  7#h7 ,aggregation  
rules ,except z provid$ by ! ,secret>y1 
rules simil> to ! rules ( subsections   
7b7 & 7c7 ( section #dad %all apply4    
7c7 ,treatm5t ( equity-,bas$ comp5sation
  7#a7 ,9 g5]al ,except z provid$ 9     
p>agraph 7#g71 subsection 7a7 %all n    
apply to any equity-bas$ comp5sation1 & 
su* equity-bas$ comp5sation %all be     
includible 9 income z provid$ 9         
p>agraphs 7#b7 ?r\gh 7#f74  7#b7 ,plan  
failures  7,a7 ,gross income inclusion  
7i7 ,9 g5]al ,if at any "t dur+ a       
taxable ye> a nonqualifi$ def]r$        
comp5sation plan-- 7,i7 fails to meet ! 
requirem5ts ( p>agraphs 7#c71 7#d71 &   
7#e71 or  7,,ii7 is n op]at$ 9          
accordance ) su* requirem5ts1  all      
equity-bas$ comp5sation def]r$ "u ! plan
 = ! taxable ye> & all prec$+ taxable   

ye>s %all be includible 9 gross income =
 ! taxable ye> to ! ext5t n subject to a
 sub/antial risk ( =feiture & n         
previ\sly includ$ 9 gross income4  7ii7 
,application only to affect$ p>ticipants
 ,clause 7i7 %all only apply ) respect  
to all comp5sation def]r$ "u ! plan =   
p>ticipants ) respect to :om ! failure  
relates4  7,b7 ,int]e/ & additional tax 
payable ) respect to previ\sly def]r$   
equity-bas$ comp5sation  7i7 ,9 g5]al   
,if equity-bas$ comp5sation is requir$  
to be includ$ 9 gross income "u         
subp>agraph 7,a7 = a taxable ye>1 ! tax 
impos$ by ?is *apt] = ! taxable ye> %all
 be increas$ by ! sum (-- 7,i7 ! am\nt (
 int]e/ det]m9$ "u clause 7ii71 &       
7,,ii7 an am\nt equal to #bj p]c5t ( !  
equity-bas$ comp5sation :i* is requir$  
to be includ$ 9 gross income4  7ii7     
,int]e/ ,= purposes ( clause 7i71 !     
int]e/ det]m9$ "u ?is clause = any      
taxable ye> is ! am\nt ( int]e/ at !    
und]paym5t rate plus #a p]c5tage po9t on
 ! und]paym5ts t w\ld h occurr$ _h !    

def]r$ equity-bas$ comp5sation be5      
includible 9 gross income = ! taxable   
ye> 9 :i* fir/ def]r$ or1 if lat]1 !    
fir/ taxable ye> 9 :i* su* comp5sation  
is n subject to a sub/antial risk (     
=feiture4  7#c7 ,di/ributions  7,a7 ,9  
g5]al ,! requirem5ts ( ?is p>agraph are 
met if ! plan provides t equity-bas$    
comp5sation def]r$ "u ! plan may n be   
di/ribut$ e>li] ?an-- 7i7 sep>ation f   
s]vice z det]m9$ by ! ,secret>y 7except 
z provid$ 9 subp>agraph 7,b77i771  7ii7 
! date ! p>ticipant becomes disabl$ 7)9 
! mean+ ( subp>agraph 7,c771  7iii7     
dea?1  7iv7 a specifi$ "t 7or pursuant  
to a fix$ s*$ule7 specifi$ "u ! plan at 
! date ( ! def]ral ( su* comp5sation1   
7v7 to ! ext5t provid$ by ! ,secret>y1 a
 *ange 9 ! own]%ip or effective control 
( ! corporation1 or 9 ! own]%ip ( a     
sub/antial portion ( ! assets ( !       
corporation1 or  7vi7 ! occurr5ce ( an  
un=eseeable em]g5cy4  7,b7 ,special     
rules  7i7 ,specifi$ employees ,9 ! case
 ( any specifi$ employee1 ! requirem5t (

 subp>agraph 7,a77i7 is met only if     
di/ributions may n be made be=e ! date  
:i* is #f mon?s aft] ! date ( sep>ation 
f s]vice 7or1 if e>li]1 ! date ( dea? ( 
! employee74 ,= purposes ( ! prec$+     
s5t5ce1 a specifi$ employee is a key    
employee 7z def9$ 9 section #daf7;i7 )\t
 reg>d to p>agraph 7#e7 !re(7 ( a       
corporation any /ock 9 :i* is publicly  
trad$ on an e/abli%$ securities m>ket or
 o!rwise4  7ii7 ,un=eseeable em]g5cy ,= 
purposes ( subp>agraph 7,a77vi7-- 7,i7  
,9 g5]al ,! t]m un=eseeable em]g5cy     
means a sev]e f9ancial h>d%ip to !      
p>ticipant result+ f an illness or      
accid5t ( ! p>ticipant1 ! p>ticipant's  
sp\se1 or a dep5d5t 7z def9$ 9 section  
#aeb7;a77 ( ! p>ticipant1 loss ( !      
p>ticipant's prop]ty due to casualty1 or
 o!r simil> extraord9>y & un=eseeable   
circum/ances aris+ z a result ( ev5ts   
beyond ! control ( ! p>ticipant4  7,,ii7
 ,limitation on di/ributions ,!         
requirem5t ( subp>agraph 7,a77vi7 is met
 only if1 z det]m9$ "u regulations ( !  

,secret>y1 ! am\nts di/ribut$ ) respect 
to an em]g5cy d n exce$ ! am\nts        
necess>y to satisfy su* em]g5cy plus    
am\nts necess>y to pay taxes reasonably 
anticipat$ z a result ( ! di/ribution1  
aft] tak+ into acc\nt ! ext5t to :i* su*
 h>d%ip is or may be reliev$ ?r\gh      
reimbursem5t or comp5sation by insurance
 or o!rwise or by liquidation ( !       
p>ticipant's assets 7to ! ext5t !       
liquidation ( su* assets w\ld n itself  
cause sev]e f9ancial h>d%ip74  7,c7     
,disabl$ ,= purposes ( subp>agraph      
7,a77ii71 a p>ticipant %all be consid]$ 
disabl$ if ! p>ticipant-- 7i7 is unable 
to engage 9 any sub/antial ga9ful       
activity by reason ( any m$ically       
det]m9able physical or m5tal impairm5t  
:i* c be expect$ to result 9 dea? or c  
be expect$ to la/ = a cont9u\s p]iod ( n
 less ?an #ab mon?s1 or  7ii7 is1 by    
reason ( any m$ically det]m9able        
physical or m5tal impairm5t :i* c be    
expect$ to result 9 dea? or c be expect$
 to la/ = a cont9u\s p]iod ( n less ?an 

#ab mon?s1 receiv+ income replacem5t    
b5efits = a p]iod ( n less ?an #c mon?s 
"u an accid5t & heal? plan cov]+        
employees ( ! p>ticipant's employ]4     
7#d7 ,accel]ation ( b5efits  7,a7 ,9    
g5]al ,! requirem5ts ( ?is p>agraph are 
met if ! plan does n p]mit ! accel]ation
 ( ! "t or s*$ule ( any paym5t (        
equity-bas$ comp5sation "u ! plan1      
except z provid$ 9 regulations by !     
,secret>y4  7,b7 ,exception ,a plan %all
 n be treat$ z fail+ to meet !          
requirem5t ( subp>agraph 7,a7 solely    
because ! plan t]ms p]mit ! removal (   
p>ticipants :o are or become ineligible 
to p>ticipate 9 ! plan1 & to di/ribute !
 b5efits ( su* p>ticipants to ano!r     
qualifi$ retirem5t plan 7z def9$ 9      
section #digd7;c77 ( ! p>ticipants1 if  
su* removal is necess>y to ma9ta9 !     
plan's exemption f ! provisions ( !     
,employee ,retirem5t ,income ,security  
,act ( #aigd4  7#e7 ,elections  7,a7 ,9 
g5]al ,! requirem5ts ( ?is p>agraph are 
met if ! requirem5ts ( subp>agraphs 7,b7

 & 7,c7 are met4  7,b7 ,initial def]ral 
decision  7i7 ,9 g5]al ,! requirem5ts ( 
?is subp>agraph are met if ! plan       
provides t equity-bas$ comp5sation =    
s]vices p]=m$ dur+ a taxable ye> may be 
def]r$ at ! p>ticipant's election only  
if ! election to def] su* comp5sation is
 made n lat] ?an ! close ( ! prec$+     
taxable ye> or at su* o!r "t z provid$ 9
 regulations4  7ii7 ,fir/ ye> (         
eligibility ,9 ! case ( ! fir/ ye> 9 :i*
 a p>ticipant becomes eligible to       
p>ticipate 9 ! plan1 su* election may be
 made ) respect to s]vices to be p]=m$  
subsequ5t to ! election )9 #cj days aft]
 ! date ! p>ticipant becomes eligible to
 p>ticipate 9 su* plan4  7iii7          
,p]=mance-bas$ comp5sation ,9 ! case (  
any equity-bas$ comp5sation :i* is      
p]=mance-bas$ & is bas$ on s]vices p]=m$
 ov] a p]iod ( at lea/ #ab mon?s1 su*   
election may be made no lat] ?an #f     
mon?s be=e ! end ( ! p]iod4  7,c7       
,*anges 9 "t & =m ( di/ribution ,!      
requirem5ts ( ?is subp>agraph are met   

if1 9 ! case ( a plan :i* p]mits "u a   
subsequ5t election a delay 9 a paym5t or
 a *ange 9 ! =m ( paym5t ( equity-bas$  
comp5sation-- 7i7 ! plan requires t su* 
election may n take effect until at lea/
 #ab mon?s aft] ! date on :i* ! election
 is made1  7ii7 9 ! case ( an election  
relat$ to a paym5t n describ$ 9 clause  
7ii71 7iii71 or 7vi7 ( p>agraph         
7#b77;,a71 ! plan requires t ! paym5t ) 
respect to :i* su* election is made be  
def]r$ = a p]iod ( n less ?an #e ye>s f 
! date su* paym5t w\ld o!rwise h be5    
made1 &  7iii7 ! plan requires t any    
election relat$ to a paym5t describ$ 9  
p>agraph 7#b77;,a77iv7 may n be made    
less ?an #ab mon?s prior to ! date ( !  
fir/ s*$ul$ paym5t "u su* p>agraph4     
7#f7 ,rules relat+ to fund+ ,= purposes 
( ?is subsection-- 7,a7 ,(f%ore prop]ty 
9 a tru/ ,9 ! case ( assets set aside   
7directly or indirectly7 9 a tru/ 7or   
o!r arrangem5t det]m9$ by ! ,secret>y7 =
 purposes ( pay+ def]r$ equity-bas$     
comp5sation "u a nonqualifi$ def]r$     

comp5sation plan1 = purposes ( section  
#hc su* assets %all be treat$ z prop]ty 
transf]r$ 9 connection ) ! p]=mance (   
s]vices :e!r or n su* assets are        
available to satisfy claims ( g5]al     
cr$itors-- 7i7 at ! "t set aside if su* 
assets 7or su* tru/ or o!r arrangem5t7  
are locat$ outside ( ! ,unit$ ,/ates1 or
  7ii7 at ! "t transf]r$ if su* assets  
7or su* tru/ or o!r arrangem5t7 are     
subsequ5tly transf]r$ outside ( ! ,unit$
 ,/ates4  ,?is subp>agraph %all n apply 
to assets locat$ 9 a =eign jurisdiction 
if sub/antially all ( ! s]vices to :i* !
 nonqualifi$ def]r$ equity-bas$         
comp5sation relates are p]=m$ 9 su*     
jurisdiction4  7,b7 ,employ]'s f9ancial 
heal? ,9 ! case ( equity-bas$           
comp5sation def]r$ "u a nonqualifi$     
def]r$ comp5sation plan1 !re is a       
transf] ( prop]ty )9 ! mean+ ( section  
#hc ) respect to su* comp5sation z ( !  
e>li] (-- 7i7 ! date on :i* ! plan fir/ 
provides t assets w become re/rict$ to !
 provision ( b5efits "u ! plan 9        

connection ) a *ange 9 ! employ]'s      
f9ancial heal?1 or  7ii7 ! date on :i*  
assets are s re/rict$1  :e!r or n su*   
assets are available to satisfy claims (
 g5]al cr$itors4  7,c7 ,treatm5t (      
employ]'s def9$ b5efit plan dur+        
re/rict$ p]iod  7i7 ,9 g5]al ,if-- 7,i7 
dur+ any re/rict$ p]iod ) respect to a  
s+le-employ] def9$ b5efit plan1 assets  
are set aside or res]v$ 7directly or    
indirectly7 9 a tru/ 7or o!r arrangem5t 
z det]m9$ by ! ,secret>y7 or transf]r$  
to su* a tru/ or o!r arrangem5t =       
purposes ( pay+ def]r$ equity-bas$      
comp5sation ( an applicable cov]$       
employee "u a nonqualifi$ def]r$        
comp5sation plan ( ! plan sponsor or    
memb] ( a controll$ gr\p :i* includes ! 
plan sponsor1 or  7,,ii7 a nonqualifi$  
def]r$ comp5sation plan ( ! plan sponsor
 or memb] ( a controll$ gr\p :i*        
includes ! plan sponsor provides t      
assets w become re/rict$ to ! provision 
( b5efits "u ! plan to an applicable    
cov]$ employee 9 connection ) su*       

re/rict$ p]iod 7or o!r simil> f9ancial  
measure det]m9$ by ! ,secret>y7 )       
respect to ! def9$ b5efit plan1 or      
assets are s re/rict$1  su* assets %all1
 = purposes ( section #hc1 be treat$ z  
prop]ty transf]r$ 9 connection ) !      
p]=mance ( s]vices :e!r or n su* assets 
are available to satisfy claims ( g5]al 
cr$itors4 ,subclause 7,i7 %all n apply )
 respect to any assets :i* are s set    
aside be=e ! re/rict$ p]iod ) respect to
 ! def9$ b5efit plan4  7ii7 ,re/rict$   
p]iod ,= purposes ( ?is subsection1 !   
t]m re/rict$ p]iod means1 ) respect to  
any plan describ$ 9 clause 7i7-- 7,i7   
any p]iod dur+ :i* ! plan is 9 at-risk  
/atus 7z def9$ 9 section #dcj7;i771     
7,,ii7 any p]iod ! plan sponsor is a    
debtor 9 a case "u title #aa1 ,unit$    
,/ates ,code1 or simil> ,f$]al or ,/ate 
law1 &  7,,iii7 ! #ab-mon? p]iod beg9n+ 
on ! date :i* is #f mon?s be=e !        
t]m9ation date ( ! plan if1 z ( !       
t]m9ation date1 ! plan is n suffici5t = 
b5efit liabilities 7)9 ! mean+ ( section

 #djda ( ! ,employee ,retirem5t ,income 
,security ,act ( #aigd74  7iii7 ,special
 rule = paym5t ( taxes on def]r$        
equity-bas$ comp5sation includ$ 9 income
 ,if an employ] provides directly or    
indirectly = ! paym5t ( any ,f$]al1     
,/ate1 or local income taxes ) respect  
to any equity-bas$ comp5sation requir$  
to be includ$ 9 gross income by reason (
 ?is subp>agraph-- 7,i7 int]e/ %all be  
impos$ "u p>agraph 7#a77;,b77i77,i7 on !
 am\nt ( su* paym5t 9 ! same mann] z if 
su* paym5t 0 "p ( ! def]r$ equity-bas$  
comp5sation to :i* x relates1  7,,ii7   
su* paym5t %all be tak5 into acc\nt 9   
det]m9+ ! am\nt ( ! additional tax "u   
p>agraph 7#a77;,b77i77,,ii7 9 ! same    
mann] z if su* paym5t 0 "p ( ! def]r$   
equity-bas$ comp5sation to :i* x        
relates1 &  7,,iii7 no d$uction %all be 
all[$ "u ?is title ) respect to su*     
paym5t4  7iv7 ,o!r def9itions ,=        
purposes ( ?is subsection-- 7,i7        
,applicable cov]$ employee ,! t]m       
applicable cov]$ employee means any     

cov]$ employee ( a plan sponsor or a    
memb] ( a controll$ gr\p :i* includes ! 
plan sponsor1 & any =m] employee :o 0 a 
cov]$ employee at ! "t ( t]m9ation (    
employm5t ) ! plan sponsor or a memb] ( 
a controll$ gr\p :i* includes ! plan    
sponsor4  7,,ii7 ,cov]$ employee ,! t]m 
cov]$ employee means an individual      
describ$ 9 section #afb7m77#c7 or an    
individual subject to ! requirem5ts (   
section #af7;a7 ( ! ,securities ,ex*ange
 ,act ( #aicd4  7v7 ,int]nal ,rev5ue    
,s]vice int]nal guidance ,! ,secret>y   
%all develop in/ructions & tra9+        
mat]ials = employees ( ! ,int]nal       
,rev5ue ,s]vice to assi/ su* employees 9
 obta9+ & evaluat+ in=mation & det]m9+  
:e!r !re exi/s a re/rict$ p]iod )       
respect to a company ) a s+le-employ]   
def9$ b5efit plan1 & :e!r su* a company 
has1 dur+ a re/rict$ p]iod1 set aside   
assets = ! purpose ( pay+ def]r$        
comp5sation "u a nonqualifi$ def]r$     
comp5sation plan4  7,d7 ,income         
inclusion = (f%ore tru/s & employ]'s    

f9ancial heal? ,= ea* taxable ye> t     
assets treat$ z transf]r$ "u ?is        
p>agraph rema9 set aside 9 a tru/ or o!r
 arrangem5t subject to subp>agraph 7,a71
 7,b71 or 7,c71 any increase 9 value 91 
or e>n+s ) respect to1 su* assets %all  
be treat$ z an additional transf] (     
prop]ty "u ?is p>agraph 7to ! ext5t n   
previ\sly includ$ 9 income74  7,e7      
,int]e/ on tax liability payable )      
respect to transf]r$ prop]ty  7i7 ,9    
g5]al ,if am\nts are requir$ to be      
includ$ 9 gross income by reason (      
subp>agraph 7,a71 7,b71 or 7,c7 = a     
taxable ye>1 ! tax impos$ by ?is *apt] =
 su* taxable ye> %all be increas$ by !  
sum (-- 7,i7 ! am\nt ( int]e/ det]m9$ "u
 clause 7ii71 &  7,,ii7 an am\nt equal  
to #bj p]c5t ( ! am\nts requir$ to be   
includ$ 9 gross income4  7ii7 ,int]e/ ,=
 purposes ( clause 7i71 ! int]e/ det]m9$
 "u ?is clause = any taxable ye> is !   
am\nt ( int]e/ at ! und]paym5t rate plus
 #a p]c5tage po9t on ! und]paym5ts t    
w\ld h occurr$ _h ! am\nts s requir$ to 

be includ$ 9 gross income by subp>agraph
 7,a71 7,b71 or 7,c7 be5 includible 9   
gross income = ! taxable ye> 9 :i* fir/ 
def]r$ or1 if lat]1 ! fir/ taxable ye> 9
 :i* su* am\nts are n subject to a      
sub/antial risk ( =feiture4  7#g7       
,exception = highly comp5sat$ recipi5ts 
,9 ! case ( any highly comp5sat$        
employee 7z def9$ 9 section #dad7q771 or
 any p]son :o w\ld be su* a highly      
comp5sat$ employee if su* p]son 7 an    
employee ( ! s]vice recipi5t 7det]m9$ z 
( ! date ( ! grant ( ! equity-bas$      
comp5sation7-- 7,a7 p>agraphs 7#a7 ?r\gh
 7#f7 %all n apply1 &  7,b7 equity-bas$ 
comp5sation %all be treat$ "u subsection
 7a7 9 ! same mann] z o!r comp5sation   
:i* is def]r$ "u a nonqualifi$ def]r$   
comp5sation plan4  7#h7 ,equity-bas$    
comp5sation ,! t]m equity-bas$          
comp5sation means-- 7,a7 a "r to        
comp5sation bas$ on ! value (1 or       
appreciation 9 value (1 a specifi$ numb]
 ( equity units ( ! s]vice recipi5t1    
:e!r paid 9 ca% or equity1 or  7,b7 /ock

 appreciation rights or /ock options4   
,su* t]m %all n include a transf] (     
prop]ty describ$ 9 section #hc 7o!r ?an 
/ock options7 or comp5sation provid$ "u 
t portion ( any plan :i* consi/s ( a    
tru/ to :i* section #djb7;b7 applies4   
7d7 ,no inf]5ce on e>li] income         
inclusion or requirem5t ( lat] inclusion
 ,no?+ 9 ?is section %all be con/ru$ to 
prev5t ! inclusion ( am\nts 9 gross     
income "u any o!r provision ( ?is *apt] 
or any o!r rule ( law e>li] ?an ! "t    
provid$ 9 ?is section4 ,any am\nt       
includ$ 9 gross income "u ?is section   
%all n be treat$ z requir$ to be includ$
 9 gross income "u any o!r provision (  
?is *apt] or any o!r rule ( law lat] ?an
 ! "t provid$ 9 ?is section4  7e7       
,regulations ,! ,secret>y %all prescribe
 su* regulations z may be necess>y or   
appropriate to c>ry out ! purposes ( ?is
 section1 includ+ regulations-- 7#a7    
provid+ = ! det]m9ation ( am\nts (      
def]ral 9 ! case ( a nonqualifi$ def]r$ 
comp5sation plan :i* is a def9$ b5efit  

plan1  7#b7 relat+ to *anges 9 ! own]%ip
 & control ( a corporation or assets ( a
 corporation = purposes ( subsection    
7c77#b77;,a77v71  7#c7 exempt+          
arrangem5ts f ! application ( subsection
 7c77#e7 if su* arrangem5ts w n result 9
 an improp] def]ral ( ,unit$ ,/ates tax 
& w n result 9 assets be+ effectively   
beyond ! rea* ( cr$itors1  7#d7 def9+   
f9ancial heal? = purposes ( subsection  
7c77#e77;,b71 &  7#e7 disreg>d+ a       
sub/antial risk ( =feiture 9 cases :]e  
necess>y to c>ry out ! purposes ( ?is   
section4  4  7b7 ,)hold+ ( tax on       
nonresid5t ali5s ,section #adda7;c77#d7 
( ! ,int]nal ,rev5ue ,code ( #aihf is   
am5d$ by ins]t+ 7o!r ?an "u a           
nonqualifi$ def]r$ comp5sation plan 7)9 
! mean+ ( section #dji;,a7b77#b77 aft]  
comp5sation = p]sonal s]vices4  7c7     
,t]m9ation ( c]ta9 o!r nonqualifi$      
def]r$ comp5sation rules  7#a7 #deg7;b7 
plans ( tax exempt organizations        
,section #deg ( ! ,int]nal ,rev5ue ,code
 ( #aihf is am5d$ by add+ at ! end !    

foll[+ new subsection3  7h7 ,t]m9ation (
 c]ta9 plans  7#a7 ,tax-exempt          
organization plans ,?is section %all n  
apply to am\nts def]r$ :i* are          
attributable to s]vices p]=m$ aft]      
,decemb] #ca1 #bjbj1 "u a plan ma9ta9$  
by an employ] describ$ 9 subsection     
7e77#a77;,b74  7#b7 ,ineligible def]r$  
comp5sation plans ,subsection 7f7 %all n
 apply to am\nts def]r$ :i* are         
attributable to s]vices p]=m$ aft]      
,decemb] #ca1 #bjbj4  4  7#b7           
,nonqualifi$ def]r$ comp5sation f c]ta9 
tax indiff]5t p>ties  7,a7 ,9 g5]al     
,subp>t ,b ( "p ,,ii ( sub*apt] ,e (    
*apt] #a ( su* ,code is am5d$ by /rik+  
section #deg;,a 7& by /rik+ ! item      
relat+ to su* section 9 ! table (       
sections = su* subp>t74  7,b7 ,con=m+   
am5dm5t ,section #bf7;b77#b7 ( su* ,code
 is am5d$ by /rik+ subp>agraph 7,x74    
7d7 ,effective date  7#a7 ,9 g5]al      
,except z o!rwise provid$ 9 ?is         
subsection1 ! am5dm5ts made by ?is      
section %all apply to am\nts :i* are    

attributable to s]vices p]=m$ aft]      
,decemb] #ca1 #bjbj4  7#b7 ,accel]at$   
paym5ts ,no lat] ?an #abj days aft] !   
date ( ! enactm5t ( ?is ,act1 !         
,secret>y ( ! ,treasury %all issue      
guidance provid+ a limit$ p]iod ( "t    
dur+ :i* a nonqualifi$ def]r$           
comp5sation arrangem5t attributable to  
s]vices p]=m$ on or be=e ,decemb] #ca1  
#bjbj1 may1 )\t violat+ ! requirem5ts ( 
section #dji;,a ( ! ,int]nal ,rev5ue    
,code ( #aihf1 be am5d$ to con=m ! date 
( di/ribution to ! date ! am\nts are    
requir$ to be includ$ 9 income4  7#c7   
,c]ta9 back-to-back arrangem5ts ,if !   
taxpay] is also a s]vice recipi5t &     
ma9ta9s "o or m nonqualifi$ def]r$      
comp5sation arrangem5ts = its s]vice    
provid]s "u :i* any am\nt is            
attributable to s]vices p]=m$ on or be=e
 ,decemb] #ca1 #bjbj1 ! guidance issu$  
"u p>agraph 7#b7 %all p]mit su*         
arrangem5ts to be am5d$ to con=m ! dates
 ( di/ribution "u su* arrangem5t to !   
date am\nts are requir$ to be includ$ 9 

! income ( su* taxpay] "u ?is           
subsection4  7#d7 ,accel]at$ paym5t n   
treat$ z mat]ial modification ,any      
am5dm5t to a nonqualifi$ def]r$         
comp5sation arrangem5t made pursuant to 
p>agraph 7#b7 or 7#c7 %all n be treat$ z
 a mat]ial modification ( ! arrangem5t =
 purposes ( section #dji;,a ( ! ,int]nal
 ,rev5ue ,code ( #aihf4  7#e7           
,application to exi/+ def]rals ,9 ! case
 ( any am\nt def]r$ to :i* ?is section  
does n o!rwise apply solely by reason ( 
! fact t ! am\nt is attributable to     
s]vices p]=m$ be=e ,janu>y #a1 #bjba1 to
 ! ext5t su* am\nt is n includible 9    
gross income 9 a taxable ye> beg9n+ be=e
 #bjbi1 su* am\nts %all be includible 9 
gross income 9 ! lat] (-- 7,a7 ! la/    
taxable ye> beg9n+ be=e #bjbi2 or  7,b7 
! taxable ye> 9 :i* !re is no sub/antial
 risk ( =feiture ( ! rights to su*      
comp5sation4  7e7 ,transf] ( am\nts     
collect$  7#a7 ,9 g5]al ,! ,secret>y ( !
 ,treasury %all transf] annually an     
am\nt equal to ! increase 9 rev5ue      

attributable to ! enactm5t ( subsections
 7a71 7b71 & 7c7 ( ?is section to ! fir/
 & ! second ,p5sion ,b5efit ,gu>anty    
funds describ$ 9 section #djje7;a7 ( !  
,employee ,retirem5t ,income ,security  
,act ( #aigd 7#bi ,u4,s4,c4 #acje7;a771 
& su* am\nt %all be allocat$-- 7,a7 to !
 fund us$ ) respect to basic b5efits    
gu>ante$ "u section #djbb;,a ( su* ,act 
7#bi ,u4,s4,c4 #acbb;a71 until su* "t t 
! ,p5sion ,b5efit ,gu>anty              
,corporation's annual projections report
 indicates t su* fund & ! fund us$ )    
respect to basic b5efits gu>ante$ "u    
section #djbb ( su* ,act 7#bi ,u4,s4,c4 
#acbb7 h sub/antially simil> future     
f9ancial conditions & sub/antially      
simil> risks ( insolv5cy2 &  7,b7       
!reaft]1 to ea* ( ! funds describ$ 9    
subp>agraph 7,a7 9 equal am\nts1 subject
 to p>agraph 7#b74  7#b7 ,adju/m5ts to  
allocations ,if1 aft] am\nts transf]r$  
"u p>agraph 7#a7 h be5 allocat$ 9       
accordance ) p>agraph 7#a77;,b71 !      
,director ( ! ,p5sion ,b5efit ,gu>anty  

,corporation 7ref]r$ to 9 ?is section z 
! ,director7 det]m9es t ! future        
f9ancial conditions or risks ( insolv5cy
 ( ! funds us$ ) respect to basic       
b5efits gu>ante$ "u ea* ( sections      
#djbb;,a & #djbb ( ! ,employee          
,retirem5t ,income ,security ,act (     
#aigd are no long] sub/antially simil> z
 describ$ 9 p>agraph 7#a77;,a71 !       
,director1 9 consultation ) ! bo>d (    
directors ( ! ,p5sion ,b5efit ,gu>anty  
,corporation1 %all det]m9e an           
appropriate allocation ( su* am\nts     
betwe5 su* funds4  #c4 ,dep>tm5t (      
,labor ov]sight ( top hat plans  7a7    
,guidance ,n lat] ?an ,decemb] #ca1     
#bjbj1 ! ,secret>y ( ,labor %all issue  
guidance def9+ ! t]m select gr\p (      
managem5t or highly comp5sat$ employees 
= purposes ( ! ,employee ,retirem5t     
,income ,security ,act ( #aigd 7#bi     
,u4,s4,c4 #ajja et seq474 ,su* guidance 
%all address ! p>ticipation rate & plan 
language ) respect to a plan :i* is     
unfund$ & is ma9ta9$ by an employ]      

prim>ily = ! purpose ( provid+ def]r$   
comp5sation = a select gr\p ( managem5t 
or highly comp5sat$ employees1 & !      
comp5sation & description ( job duties (
 employees eligible to p>ticipate 9 su* 
plans4  7b7 ,regulations ,n lat] ?an    
,decemb] #ca1 #bjbj1 ! ,secret>y (      
,labor %all issue f9al regulations      
requir+ ! sponsors ( plans t are unfund$
 & ma9ta9$ by employ]s prim>ily = !     
purpose ( provid+ def]r$ comp5sation = a
 select gr\p ( managem5t or highly      
comp5sat$ employees to align eligibility
 requirem5ts = p>ticipation 9 su* plans 
) ! guidance issu$ "u subsection 7a74   
7c7 ,disclosure requirem5t ,"p #a (     
title ,i ( ! ,employee ,retirem5t       
,income ,security ,act ( #aigd 7#bi     
,u4,s4,c4 #ajba et seq47 is am5d$ by    
add+ at ! end ! foll[+3  #aab4 ,plans = 
a select gr\p ( managem5t or highly     
comp5sat$ employees ,beg9n+ ,janu>y #a1 
#bjba1 ! plan sponsor ( a plan :i* is   
unfund$ & is ma9ta9$ by an employ]      
prim>ily = ! purpose ( provid+ def]r$   

comp5sation = a select gr\p ( managem5t 
or highly comp5sat$ employees %all      
report to ! ,secret>y annually on1 )    
respect to ! previ\s plan ye>-- 7#a7 !  
job title & sal>y ( ea* employee        
p>ticipat+ 9 ! plan2  7#b7 ! p]c5tage ( 
! employ]'s work=ce t is eligible to    
p>ticipate 9 su* plan2  7#c7 ! p]c5tage 
( employees :o actually p>ticipat$ 9 !  
plan2  7#d7 a comp>ison ( ! annual      
comp5sation ( employees eligible to     
p>ticipate 9 su* plan ) ! annual        
comp5sation ( employees n eligible to   
p>ticipate 9 ! plan2 &  7#e7 any o!r    
in=mation1 z ! ,secret>y det]m9es       
appropriate4  4  7d7 ,treasury          
regulations & guidance ,! ,secret>y ( ! 
,treasury1 9 consultation ) ! ,secret>y 
( ,labor1 %all issue su* regulations or 
guidance z are necess>y-- 7#a7 to assi/ 
plans 9 tak+ appropriate corrective     
actions :5 employees t are n "p ( a     
select gr\p ( managem5t or highly       
comp5sat$ employees 7z def9$ 9 !        
guidance issu$ pursuant to section      

#c7;a77 are f\nd to be p>ticipat+ 9 su* 
plans2 &  7#b7 to cl>ify ! treatm5t ( ! 
consequ5ces = purposes ( ! ,int]nal     
,rev5ue ,code ( #aihf ( ! ,secret>y (   
,labor's guidance on plan corrective    
actions s t employees :o are n "p ( !   
select gr\p describ$ 9 p>agraph 7#a7 are
 n adv]sely affect$1 includ+ guidance on
 actions :i* plan sponsors %\ld take )  
respect to p>ticipants 9 su* plans :o h 
already made ! maximum p]missible       
contributions "u qualifi$ plans4  #d4   
,disclosure ( nonqualifi$ def]r$        
comp5sation on ,=m ,w-#b ,n lat] ?an #f 
mon?s aft] ! date ( ! enactm5t ( ?is    
,act & effective = taxable ye> #bjbj1 ! 
,secret>y ( ! ,treasury 7or !           
,secret>y's delegate7 %all-- 7#a7 revise
 ! ,=m ,w-#b to require report+ ( am\nts
 def]r$ "u a nonqualifi$ def]r$         
comp5sation plan 9 box #ab2 &  7#b7 am5d
 ! regulations "u sections              
#fjea7;a77#ac7 & #fjda7;g7 ( ! ,int]nal 
,rev5ue ,code ( #aihf to make ! report+ 
( su* def]rals "u su* sections m&atory4 

,= purposes ( ! prec$+ s5t5ce1 ! t]m    
nonqualifi$ def]r$ comp5sation plan has 
! mean+ giv5 su* t]m 9 section          
#dji;,a7b77#b7 ( ! ,int]nal ,rev5ue     
,code ( #aihf4