Page:United States Statutes at Large Volume 100 Part 3.djvu/623

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2431

(ii) are deferred from taxable years beginning after December 31, 1986, pursuant to an agreement which— (I) was in writing on August 16, 1986, (II) on such date provides for a deferral for each taxable year covered by the agreement of a fixed amount or of an amount determined pursuant to a fixed formula. Clause (ii) shall not apply to any taxable year ending after the date on which any modification to the amount or formula described in subclause (II) is effective. Amounts described in the first sentence shall be taken into account for applying section 457 to other amounts deferred under any eligible deferred compensation plan.

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(4) DEFERRED COMPENSATION PLANS FOR STATE JUDGES.—The

amendments made by this section shall not apply to any qualiin fied State judicial plan (as defined in section 131(c)(3)(B) of the Revenue Act of 1978 as amended by section 252 of the Tax Equity and Fiscal Responsibility Act of 1982). (5)

SPECIAL RULE

FOR CERTAIN

DEFERRED COMPENSATION

PLANS.—The amendments made by this section shall not apply ^'f to employees on August 16, 1986, of— w (A) a deferred compensation plan of a nonprofit corporation organized under the laws of the State of Alabama with •fissm respect to which the Internal Revenue Service issued a ruling dated March 17, 1976, that the plan would not affect ' the tax-exempt status of the corporation, or t:. (B) to a deferred compensation plan with respect to which a letter dated November 6, 1975, submitted the original plan to the Internal Revenue Service, an amendment was submitted on November 19, 1975, and the Internal Revenue Service responded with a letter dated December 24, 1975, but only with respect to deferrals under such plan. SEC. 1108. SPECIAL RULES FOR SIMPLIFIED EMPLOYEE PENSIONS. (a) SALARY REDUCTION ARRANGEMENTS PERMITTED.—Section 408(k)

(relating to simplified employee pension defined) is amended by inserting after paragraph (5) the following new paragraph: "(6) EMPLOYEE MAY ELECT SALARY REDUCTION ARRANGEMENT.—

"(A) IN GENERAL.—A simplified employee pension shall Lf • not fail to meet the requirements of this subsection for a year merely because, under the terms of the pension— n "(i) an employee may elect to have the employer ii, make payments— ft3 V "(I) as elective employer contributions to the simplified employee pension on behalf of the employee, or "(II) to the employee directly in cash, "(ii) an election described in clause (i)(I) is made or is •r * ' in effect with respect to not less than 50 percent of the employees of the employer, and "(iii) the deferral percentage for such year of each highly compensated employee eligible to participate is not more than the product derived by multiplying the average of the deferral percentages for such year of all employees (other than highly compensated employees) eligible to participate by 1.25.

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