Page:United States Statutes at Large Volume 92 Part 3.djvu/152

 92 STAT. 2784

PUBLIC LAW 95-600—NOV. 6, 1978 plan solely because, under the plan, the participant may choose among the benefits of the plan. "(b) EXCEPTION FOR HIGHLY COMPENSATED PARTICIPANTS WHERE PLAN IS DISCRIMINATORY.—



"(1) IN GENERAL.—In the case of a highly compensated participant, subsection (a) shall not apply to any benefit attributable to a plan year for which the plan discriminates in favor of— "(A) highly compensated individuals as to eligibility to participate, or "(B) highly compensated participants as to contributions and benefits. "(2) YEAR OF INCLUSION.—For purposes of determining the
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taxable year of inclusion, any benefit described in paragraph (1) shall be treated as received or accrued in the participant's taxable year in which the plan year ends. "(c) DISCRIMINATION AS TO BENEFITS OR CONTRIBUTIONS.—For purposes of subparagraph (B) of subsection (b)(1), a cafeteria plan does not discriminate where nontaxable benefits and total benefits (or employer contributions allocable to nontaxable benefits and employer contributions for total benefits) do not discriminate in favor of highly compensated participants. "(d) CAFETERIA PLAN DEFINED.—For purposes of this section— "(1) IN GENERAL.—The term 'cafeteria plan' means a written plan under which— "(A) all participants are employees, and "(B) the participants may choose among two or more benefits. The benefits which may be chosen may be nontaxable benefits, or cash, property, or other taxable benefits. "(2) DEFERRED COMPENSATION PLANS EXCLUDED.—The term 'cafeteria plan' does not include any plan which provides for deferred compensation. "(e)

26 USC 152.

ii

HIGHLY

COMPENSATED

PARTICIPANT

AND INDIVIDUAL

DEFINED.—For purposes of this section— "(1) HIGHLY COMPENSATED PARTICIPANT.—The term 'highly compensated participant' means a participant who is— "(A) an officer, "(B) a shareholder owning more than 5 percent of the voting power or value of all classes of stock of the employer, "(C) highly compensated, or "(D) a spouse or dependent (within the meaning of section 152) of an individual described in subparagraph (A), (B), or (C). "(2) HIGHLY COMPENSATED INDIVIDUAL.—The term 'highly compensated individual' means an individual who is described in subparagraphs (A), (B), (C), or (D) of paragraph (1). "(f) NONTAXABLE BENEFIT DEFINED.—For purposes of this section, the term 'nontaxable benefit' means any benefit which, with the application of subsection (a), is not includible in the gross income of the employee. "(g) SPECIAL RULES.— "(1) COLLECTIVELY

BARGAINED

PLAN

NOT CONSIDERED

DISCRIMINATORY.—For purposes of this section, a plan shall not be treated as discriminatory if the plan is maintained under an agreement which the Secretary finds to be a collective bargaining agreement between employee representatives and one or more employers.

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