Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514 amended section generally, substituting “Deferred compensation plans of State and local governments and tax-exempt organizations” for “Deferred compensation plans with respect to service for State and local governments” as section catchline and revising and restating as subsecs. (a) to (c), (e), and (f) provisions formerly contained in subsecs. (a) to (e) and adding provisions comprising subsec. (d).
Cases: Foil v. Commissioner, 920 F.2d 1196 (5th Cir. 1990)
Forms: Form W-2
Final rules 3
(a) Year of inclusion in gross income
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 649(b)(1), reenacted heading without change and amended text of subsec. (a) generally. Prior to amendment, text read as follows: “In the case of a participant in an eligible deferred compensation plan, any amount of compensation deferred under the plan, and any income attributable to the amounts so deferred, shall be includible in gross income only for the taxable year in which such compensation or other income is paid or otherwise made available to the participant or other beneficiary.”
Cited by 5
(1) In general Any amount of compensation deferred under an eligible deferred compensation plan, and any income attributable to the amounts so deferred, shall be includible in gross income only for the taxable year in which such compensation or other income—
Cited by 1
(A) is paid to the participant or other beneficiary, in the case of a plan of an eligible employer described in subsection (e)(1)(A), and
(B) is paid or otherwise made available to the participant or other beneficiary, in the case of a plan of an eligible employer described in subsection (e)(1)(B).
(2) Special rule for rollover amounts To the extent provided in section 72(t)(9), section 72(t) shall apply to any amount includible in gross income under this subsection.
(3) Special rule for health and long-term care insurance In the case of a plan of an eligible employer described in subsection (e)(1)(A), to the extent provided in section 402(l), paragraph (1) shall not apply to amounts otherwise includible in gross income under this subsection.
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 845(b)(3), added par. (3).
(b) Eligible deferred compensation plan defined For purposes of this section, the term “eligible deferred compensation plan” means a plan established and maintained by an eligible employer—
Amended 2022
- 2022 Pub. L. 117-328 Pub. L. 117–328, § 110(f), inserted at end of concluding provisions “A plan which is established and maintained by an employer which is described in subsection (e)(1)(A) shall not be treated as failing to meet the requirements of this subsection solely because the plan, or another plan maintained by the employer which meets the requirements of section 401(a) or 403(b), provides for matching contributions on account of qualified student loan payments as described in section 401(m)(13).”
Cited by 60
(1) in which only individuals who perform service for the employer may be participants,
(2) which provides that (except as provided in paragraph (3)) the maximum amount which may be deferred under the plan for the taxable year (other than rollover amounts) shall not exceed the lesser of—
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 641(a)(1)(B), inserted “(other than rollover amounts)” after “taxable year” in introductory provisions.
Cited by 8
(A) the applicable dollar amount, or
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 611(e)(1)(A), substituted “the applicable dollar amount” for “$7,500”.
Cited by 2
(B) 100 percent of the participant’s includible compensation,
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 632(c)(1), substituted “100 percent” for “33⅓ percent”.
Cited by 1
(3) which may provide that, for 1 or more of the participant’s last 3 taxable years ending before he attains normal retirement age under the plan, the ceiling set forth in paragraph (2) shall be the lesser of—
Cited by 12
(A) twice the dollar amount in effect under subsection (b)(2)(A), or
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 611(e)(1)(B), substituted “twice the dollar amount in effect under subsection (b)(2)(A)” for “$15,000”.
(B) the sum of—
(i) the plan ceiling established for purposes of paragraph (2) for the taxable year (determined without regard to this paragraph), plus
(ii) so much of the plan ceiling established for purposes of paragraph (2) for taxable years before the taxable year as has not previously been used under paragraph (2) or this paragraph,
(4) which provides that compensation—
Amended 2022
- 2022 Pub. L. 117-328 Pub. L. 117–328, § 306(a), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “which provides that compensation will be deferred for any calendar month only if an agreement providing for such deferral has been entered into before the beginning of such month,”.
(A) in the case of an eligible employer described in subsection (e)(1)(A), will be deferred only if an agreement providing for such deferral has been entered into before the compensation is currently available to the individual, and
(B) in any other case, will be deferred for any calendar month only if an agreement providing for such deferral has been entered into before the beginning of such month,
(5) which meets the distribution requirements of subsection (d), and
Cited by 1
(6) except as provided in subsection (g), which provides that—
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1448(b), inserted “except as provided in subsection (g),” before “which provides that” in introductory provisions.
Cited by 2
(A) all amounts of compensation deferred under the plan,
(B) all property and rights purchased with such amounts, and
(C) all income attributable to such amounts, property, or rights,
shall remain (until made available to the participant or other beneficiary) solely the property and rights of the employer (without being restricted to the provision of benefits under the plan), subject only to the claims of the employer’s general creditors.
A plan which is established and maintained by an employer which is described in subsection (e)(1)(A) and which is administered in a manner which is inconsistent with the requirements of any of the preceding paragraphs shall be treated as not meeting the requirements of such paragraph as of the 1st plan year beginning more than 180 days after the date of notification by the Secretary of the inconsistency unless the employer corrects the inconsistency before the 1st day of such plan year. A plan which is established and maintained by an employer which is described in subsection (e)(1)(A) shall not be treated as failing to meet the requirements of this subsection solely because the plan, or another plan maintained by the employer which meets the requirements of section 401(a) or 403(b), provides for matching contributions on account of qualified student loan payments as described in section 401(m)(13).
(c) Limitation The maximum amount of the compensation of any one individual which may be deferred under subsection (a) during any taxable year shall not exceed the amount in effect under subsection (b)(2)(A) (as modified by any adjustment provided under subsection (b)(3)).
Amended 1988, 1992, 1996, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 615(a), amended heading and text of subsec. (c) generally, substituting present provisions for provisions which stated that the maximum amount of compensation that an individual could defer under subsec. (a) during any taxable year could not exceed the applicable dollar amount, as modified by any adjustment provided under subsec. (b)(3), and provided for coordination with certain other deferrals.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 611(e)(1)(A), substituted “the applicable dollar amount” for “$7,500”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 611(d)(3)(B), substituted “402(g)(7)(A)(iii)” for “402(g)(8)(A)(iii)” in concluding provisions.
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1421(b)(3)(C), substituted “section 402(h)(1)(B) or (k)” for “section 402(h)(1)(B)”.
- 1992 Pub. L. 102-318 Pub. L. 102–318 substituted “402(e)(3)” for “402(a)(8)”.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(e)(1), struck out “and paragraphs (2) and (3) of subsection (b)” after “of this subsection”.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6071(c), substituted “rural cooperative plan” for “rural electric cooperative plan” in last sentence.
Cited by 6
(d) Distribution requirements
Amended 1980, 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6064(a)(2), amended subsec. (d), as in effect on the day before the date of enactment of Pub. L. 99–514 (Oct. 22, 1986), by adding par. (10) reading as follows: “Certain plans excepted.—Any bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plan shall be treated as a plan not providing for the deferral of compensation.”
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6064(b)(2), amended subsec. (d), as in effect on the day before the date of enactment of Pub. L. 99–514 (Oct. 22, 1986), by adding par. (11) reading as follows: “Exception for nonelective deferred compensation of nonemployees.—
“(A) In general.—This section shall not apply to nonelective deferred compensation attributable to services not performed as an employee.
“(B) Nonelective deferred compensation.—For purposes of subparagraph (a), deferred compensation shall be treated as nonelective only if all individuals (other than those who have not satisfied any applicable initial service requirement) with the same relationship to the payor are covered under the same plan with no individual variations or options under the plan.”
- 1980 Pub. L. 96-222 Pub. L. 96–222 in cl. (i) struck out “described in section 501(c)(12)” after “any organization” and substituted “electric service on a mutual or cooperative basis” for “electric service” and in cl. (ii) substituted “paragraph (4) or (6) of section 501(a)” for “section 501(c)(6)” and “at least 80 percent of the members” for “all the members”.
Cited by 4
(1) In general For purposes of subsection (b)(5), a plan meets the distribution requirements of this subsection if—
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 641(a)(1)(C), added subpar. (C) and concluding provisions.
Cited by 1
(A) under the plan amounts will not be made available to participants or beneficiaries earlier than—
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(e)(2), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “the plan provides that amounts payable under the plan will be made available to participants or other beneficiaries not earlier than when the participant is separated from service with the employer or is faced with an unforeseeable emergency (determined in the manner prescribed by the Secretary by regulation), and”.
Cited by 1
(i) the calendar year in which the participant attains age 70½ (in the case of a plan maintained by an employer described in subsection (e)(1)(A), age 59½),
Amended 2019
- 2019 Pub. L. 116-94 Pub. L. 116–94, § 104(b), inserted “(in the case of a plan maintained by an employer described in subsection (e)(1)(A), age 59½)” before comma at end.
(ii) when the participant has a severance from employment with the employer,
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 646(a)(3), substituted “has a severance from employment” for “is separated from service”.
(iii) when the participant is faced with an unforeseeable emergency (determined in the manner prescribed by the Secretary in regulations),
Amended 1989
- 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(g)(4), substituted “, and” for period at end.
(iv) except as may be otherwise provided by regulations, in the case of a plan maintained by an employer described in subsection (e)(1)(A), with respect to amounts invested in a lifetime income investment (as defined in section 401(a)(38)(B)(ii)), the date that is 90 days prior to the date that such lifetime income investment may no longer be held as an investment option under the plan, or
Amended 2019
- 2019 Pub. L. 116-94 Pub. L. 116–94, § 109(d)(1), added cl. (iv).
Cited by 1
(v) as provided in section 401(a)(39),
Amended 2022
- 2022 Pub. L. 117-328 Pub. L. 117–328, § 334(b)(5), added cl. (v).
(B) the plan meets the minimum distribution requirements of paragraph (2),
(C) in the case of a plan maintained by an employer described in subsection (e)(1)(A), the plan meets requirements similar to the requirements of section 401(a)(31), and
(D) except as may be otherwise provided by regulations, in the case of amounts described in subparagraph (A)(iv), such amounts will be distributed only in the form of a qualified distribution (as defined in section 401(a)(38)(B)(i)) or a qualified plan distribution annuity contract (as defined in section 401(a)(38)(B)(iv)).
Amended 2019
- 2019 Pub. L. 116-94 Pub. L. 116–94, § 109(d)(2), added subpar. (D).
Any amount transferred in a direct trustee-to-trustee transfer in accordance with section 401(a)(31) shall not be includible in gross income for the taxable year of transfer.
(2) Minimum distribution requirements A plan meets the minimum distribution requirements of this paragraph if such plan meets the requirements of section 401(a)(9).
Amended 1988, 1989, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 649(a), reenacted heading without change and amended text of par. (2) generally, substituting present provisions for provisions which stated that a plan would meet the minimum distribution requirements of this par. if plan met the requirements of section 401(a)(9), if plan met additional distribution requirements in the case of a deceased participant, and if any distribution payable over a period of more than 1 year would only be made in substantially nonincreasing amounts.
- 1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(g)(5), inserted “and” at end.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(e)(10), amended subcl. (I) generally. Prior to amendment, subcl. (I) read as follows: “at least ⅔ of the total amount payable with respect to the participant will be paid during the life expectancy of such participant (determined as of the commencement of the distribution), and”.
Cited by 3
(3) Special rule for government plan An eligible deferred compensation plan of an employer described in subsection (e)(1)(A) shall not be treated as failing to meet the requirements of this subsection solely by reason of making a distribution described in subsection (e)(9)(A).
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 649(b)(2)(B), added par. (3).
(4) Participant certification In determining whether a distribution to a participant is made when the participant is faced with an unforeseeable emergency, the administrator of a plan maintained by an eligible employer described in subsection (e)(1)(A) may rely on a written certification by the participant that the distribution is—
Amended 2022
- 2022 Pub. L. 117-328 Pub. L. 117–328, § 312(c), added par. (4).
(A) made when the participant is faced with an unforeseeable emergency of a type which is described in regulations prescribed by the Secretary as an unforeseeable emergency, and
(B) not in excess of the amount required to satisfy the emergency need, and
that the participant has no alternative means reasonably available to satisfy such emergency need. The Secretary may provide by regulations for exceptions to the rule of the preceding sentence in cases where the plan administrator has actual knowledge to the contrary of the participant’s certification, and for procedures for addressing cases of participant misrepresentation.
(e) Other definitions and special rules For purposes of this section—
(1) Eligible employer The term “eligible employer” means—
Cited by 2
(A) a State, political subdivision of a State, and any agency or instrumentality of a State or political subdivision of a State, and
Cited by 31
(B) any other organization (other than a governmental unit) exempt from tax under this subtitle.
Cited by 2
(2) Performance of service The performance of service includes performance of service as an independent contractor and the person (or governmental unit) for whom such services are performed shall be treated as the employer.
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 491(d)(33), struck out subpar. (C) which provided that par. (1) of this subsection not apply to a qualified bond purchase plan described in section 405(a), and redesignated subpars. (D) and (E) as (C) and (D), respectively.
(3) Participant The term “participant” means an individual who is eligible to defer compensation under the plan.
(4) Beneficiary The term “beneficiary” means a beneficiary of the participant, his estate, or any other person whose interest in the plan is derived from the participant.
(5) Includible compensation The term “includible compensation” has the meaning given to the term “participant’s compensation” by section 415(c)(3).
Amended 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(p)(5), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The term ‘includible compensation’ means compensation for service performed for the employer which (taking into account the provisions of this section and other provisions of this chapter) is currently includible in gross income.”
Cited by 1
(6) Compensation taken into account at present value Compensation shall be taken into account at its present value.
(7) Community property laws The amount of includible compensation shall be determined without regard to any community property laws.
(8) Income attributable Gains from the disposition of property shall be treated as income attributable to such property.
(9) Benefits of tax exempt organization plans not treated as made available by reason of certain elections, etc. In the case of an eligible deferred compensation plan of an employer described in subsection (e)(1)(B)—
Amended 1988, 1996, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 649(b)(2)(A), in heading substituted “Benefits of tax exempt organization plans not treated as made available by reason of certain elections, etc.” for “Benefits not treated as made available by reason of certain elections, etc.” and inserted introductory provisions.
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1447(a), amended par. (9) generally. Prior to amendment, par. (9) read as follows: “Benefits not treated as made available by reason of certain elections.—If—
“(A) the total amount payable to a participant under the plan does not exceed $3,500, and
“(B) no additional amounts may be deferred under the plan with respect to the participant,
the amount payable to the participant under the plan shall not be treated as made available merely because such participant may elect to receive a lump sum payable after separation from service and within 60 days of the election.”
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011(e)(9), inserted “after separation from service and” after “lump sum payable” in concluding provisions.
(A) Total amount payable is dollar limit or less The total amount payable to a participant under the plan shall not be treated as made available merely because the participant may elect to receive such amount (or the plan may distribute such amount without the participant’s consent) if—
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34 substituted “dollar limit” for “$3,500” in heading and “the dollar limit under section 411(a)(11)(A)” for “$3,500” in cl. (i).
Cited by 1
(i) the portion of such amount which is not attributable to rollover contributions (as defined in section 411(a)(11)(D)) does not exceed the dollar limit under section 411(a)(11)(A), and
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 648(b), substituted “the portion of such amount which is not attributable to rollover contributions (as defined in section 411(a)(11)(D))” for “such amount”.
(ii) such amount may be distributed only if—
(I) no amount has been deferred under the plan with respect to such participant during the 2-year period ending on the date of the distribution, and
(II) there has been no prior distribution under the plan to such participant to which this subparagraph applied.
A plan shall not be treated as failing to meet the distribution requirements of subsection (d) by reason of a distribution to which this subparagraph applies.
(B) Election to defer commencement of distributions The total amount payable to a participant under the plan shall not be treated as made available merely because the participant may elect to defer commencement of distributions under the plan if—
(i) such election is made after amounts may be available under the plan in accordance with subsection (d)(1)(A) and before commencement of such distributions, and
(ii) the participant may make only 1 such election.
(10) Transfers between plans A participant shall not be required to include in gross income any portion of the entire amount payable to such participant solely by reason of the transfer of such portion from 1 eligible deferred compensation plan to another eligible deferred compensation plan.
(11) Certain plans excluded
Amended 1988, 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1458(a), amended par. (11) generally. Prior to amendment, par. (11) read as follows: “Certain plans excepted.—Any bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plan shall be treated as a plan not providing for the deferral of compensation.”
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6064(a)(1), added par. (11).
Cited by 1
(A) In general The following plans shall be treated as not providing for the deferral of compensation:
(i) Any bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plan.
Cited by 2
(ii) Any plan paying solely length of service awards to bona fide volunteers (or their beneficiaries) on account of qualified services performed by such volunteers.
Cited by 6
(B) Special rules applicable to length of service award plans
(i) Bona fide volunteer An individual shall be treated as a bona fide volunteer for purposes of subparagraph (A)(ii) if the only compensation received by such individual for performing qualified services is in the form of—
(I) reimbursement for (or a reasonable allowance for) reasonable expenses incurred in the performance of such services, or
(II) reasonable benefits (including length of service awards), and nominal fees for such services, customarily paid by eligible employers in connection with the performance of such services by volunteers.
(ii) Limitation on accruals A plan shall not be treated as described in subparagraph (A)(ii) if the aggregate amount of length of service awards accruing with respect to any year of service for any bona fide volunteer exceeds $6,000.
Amended 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 13612(a), substituted “$6,000” for “$3,000”.
Cited by 2
(iii) Cost of living adjustment In the case of taxable years beginning after December 31, 2017, the Secretary shall adjust the $6,000 amount under clause (ii) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2016, and any increase under this paragraph that is not a multiple of $500 shall be rounded to the next lowest multiple of $500.
Amended 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 13612(b), added cl. (iii).
(iv) Special rule for application of limitation on accruals for certain plans In the case of a plan described in subparagraph (A)(ii) which is a defined benefit plan (as defined in section 414(j)), the limitation under clause (ii) shall apply to the actuarial present value of the aggregate amount of length of service awards accruing with respect to any year of service. Such actuarial present value with respect to any year shall be calculated using reasonable actuarial assumptions and methods, assuming payment will be made under the most valuable form of payment under the plan with payment commencing at the later of the earliest age at which unreduced benefits are payable under the plan or the participant’s age at the time of the calculation.
Amended 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 13612(c), added cl. (iv).
(C) Qualified services For purposes of this paragraph, the term “qualified services” means fire fighting and prevention services, emergency medical services, and ambulance services.
(D) Certain voluntary early retirement incentive plans
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 1104(a)(1), added subpar. (D).
(i) In general If an applicable voluntary early retirement incentive plan—
(I) makes payments or supplements as an early retirement benefit, a retirement-type subsidy, or a benefit described in the last sentence of section 411(a)(9), and
(II) such payments or supplements are made in coordination with a defined benefit plan which is described in section 401(a) and includes a trust exempt from tax under section 501(a) and which is maintained by an eligible employer described in paragraph (1)(A) or by an education association described in clause (ii)(II),
such applicable plan shall be treated for purposes of subparagraph (A)(i) as a bona fide severance pay plan with respect to such payments or supplements to the extent such payments or supplements could otherwise have been provided under such defined benefit plan (determined as if section 411 applied to such defined benefit plan).
(ii) Applicable voluntary early retirement incentive plan For purposes of this subparagraph, the term “applicable voluntary early retirement incentive plan” means a voluntary early retirement incentive plan maintained by—
(I) a local educational agency (as defined in section 8101 of the Elementary and Secondary Education Act of 1965), or
Amended 2015
- 2015 Pub. L. 114-95 Pub. L. 114–95 substituted “section 8101 of the Elementary and Secondary Education Act of 1965” for “section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801)”.
Cited by 1
(II) an education association which principally represents employees of 1 or more agencies described in subclause (I) and which is described in section 501(c)(5) or (6) and exempt from tax under section 501(a).
Cited by 1
(12) Exception for nonelective deferred compensation of nonemployees
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6064(b)(1), added par. (12).
Cited by 2
(A) In general This section shall not apply to nonelective deferred compensation attributable to services not performed as an employee.
Cited by 1
(B) Nonelective deferred compensation For purposes of subparagraph (A), deferred compensation shall be treated as nonelective only if all individuals (other than those who have not satisfied any applicable initial service requirement) with the same relationship to the payor are covered under the same plan with no individual variations or options under the plan.
(13) Special rule for churches The term “eligible employer” shall not include a church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)).
Amended 1988, 1989
- 1989 Pub. L. 101-239 Pub. L. 101–239, § 7816(j), substituted “Special rule for churches” for “Exception for church plans” in heading and amended text generally. Prior to amendment, text read as follows: “The term ‘eligible deferred compensation plan’ shall not include a plan maintained by a church for church employees. For purposes of this paragraph, the term ‘church’ has the meaning given such term by section 3121(w)(3)(A), including a qualified church-controlled organization (as defined in section 3121(w)(3)(B)).”
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6064(c), added par. (13).
(14) Treatment of qualified governmental excess benefit arrangements Subsections (b)(2) and (c)(1) shall not apply to any qualified governmental excess benefit arrangement (as defined in section 415(m)(3)), and benefits provided under such an arrangement shall not be taken into account in determining whether any other plan is an eligible deferred compensation plan.
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1444(b)(2), added par. (14).
(15) Applicable dollar amount
Amended 1996, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 611(e)(2), amended heading and text of par. (15) generally. Prior to amendment, text read as follows: “The Secretary shall adjust the $7,500 amount specified in subsections (b)(2) and (c)(1) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter ending September 30, 1994, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.”
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1447(b), added par. (15).
Cited by 2
(A) In general The applicable dollar amount is $15,000.
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295 substituted “is $15,000.” for “shall be the amount determined in accordance with the following table:” and struck out table at end listing applicable dollar amounts for taxable years beginning in 2002.
Cited by 1
(B) Cost-of-living adjustments In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under subparagraph (A) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.
(16) Rollover amounts
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 641(a)(1)(A), added par. (16).
Cited by 1
(A) General rule In the case of an eligible deferred compensation plan established and maintained by an employer described in subsection (e)(1)(A), if—
Cited by 2
(i) any portion of the balance to the credit of an employee in such plan is paid to such employee in an eligible rollover distribution (within the meaning of section 402(c)(4)),
(ii) the employee transfers any portion of the property such employee receives in such distribution to an eligible retirement plan described in section 402(c)(8)(B), and
(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,
then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.
(B) Certain rules made applicable The rules of paragraphs (2) through (7), (9), and (11) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A).
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 829(a)(4), substituted “, (9), and (11)” for “and (9)”.
(C) Reporting Rollovers under this paragraph shall be reported to the Secretary in the same manner as rollovers from qualified retirement plans (as defined in section 4974(c)).
(17) Trustee-to-trustee transfers to purchase permissive service credit No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is—
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 647(b), added par. (17).
Cited by 1
(A) for the purchase of permissive service credit (as defined in section 415(n)(3)(A)) under such plan, or
(B) a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.
(18) Coordination with catch-up contributions for individuals age 50 or older In the case of an individual who is an eligible participant (as defined by section 414(v)) and who is a participant in an eligible deferred compensation plan of an employer described in paragraph (1)(A), subsections (b)(3) and (c) shall be applied by substituting for the amount otherwise determined under the applicable subsection the greater of—
Amended 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(o)(9), added par. (18).
(A) the sum of—
(i) the plan ceiling established for purposes of subsection (b)(2) (without regard to subsection (b)(3)), plus
(ii) the lesser of any designated Roth contributions made by the participant to the plan or the applicable dollar amount for the taxable year determined under section 414(v)(2)(B)(i), or
Amended 2022
- 2022 Pub. L. 117-328 Pub. L. 117–328, § 603(b)(2), inserted “the lesser of any designated Roth contributions made by the participant to the plan or” before “the applicable dollar amount”.
(B) the amount determined under the applicable subsection (without regard to this paragraph).
(f) Tax treatment of participants where plan or arrangement of employer is not eligible
Cited by 13
(1) In general In the case of a plan of an eligible employer providing for a deferral of compensation, if such plan is not an eligible deferred compensation plan, then—
Cited by 1
(A) the compensation shall be included in the gross income of the participant or beneficiary for the 1st taxable year in which there is no substantial risk of forfeiture of the rights to such compensation, and
Cited by 2
(B) the tax treatment of any amount made available under the plan to a participant or beneficiary shall be determined under section 72 (relating to annuities, etc.).
(2) Exceptions Paragraph (1) shall not apply to—
(A) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
(B) an annuity plan or contract described in section 403,
(C) that portion of any plan which consists of a transfer of property described in section 83,
(D) that portion of any plan which consists of a trust to which section 402(b) applies,
(E) a qualified governmental excess benefit arrangement described in section 415(m), and
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1444(b)(3), added subpar. (E).
(F) that portion of any applicable employment retention plan described in paragraph (4) with respect to any participant.
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 1104(b)(1), added subpar. (F).
Cited by 2
(3) Definitions For purposes of this subsection—
(A) Plan includes arrangements, etc. The term “plan” includes any agreement or arrangement.
(B) Substantial risk of forfeiture The rights of a person to compensation are subject to a substantial risk of forfeiture if such person’s rights to such compensation are conditioned upon the future performance of substantial services by any individual.
Cited by 8
(4) Employment retention plans For purposes of paragraph (2)(F)—
Amended 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, § 1104(b)(2), added par. (4).
Cited by 1
(A) In general The portion of an applicable employment retention plan described in this paragraph with respect to any participant is that portion of the plan which provides benefits payable to the participant not in excess of twice the applicable dollar limit determined under subsection (e)(15).
Cited by 2
(B) Other rules
(i) Limitation Paragraph (2)(F) shall only apply to the portion of the plan described in subparagraph (A) for years preceding the year in which such portion is paid or otherwise made available to the participant.
(ii) Treatment A plan shall not be treated for purposes of this title as providing for the deferral of compensation for any year with respect to the portion of the plan described in subparagraph (A).
(C) Applicable employment retention plan The term “applicable employment retention plan” means an employment retention plan maintained by—
(i) a local educational agency (as defined in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801)), or
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141 substituted “section 8101” for “section 9101” and “(20 U.S.C. 7801)),” for “(20 U.S.C. 7801),”.
Cited by 1
(ii) an education association which principally represents employees of 1 or more agencies described in clause (i) and which is described in section 501(c)(5) or (6) and exempt from taxation under section 501(a).
Cited by 1
(D) Employment retention plan The term “employment retention plan” means a plan to pay, upon termination of employment, compensation to an employee of a local educational agency or education association described in subparagraph (C) for purposes of—
(g) Governmental plans must maintain set-asides for exclusive benefit of participants
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188, § 1448(a), added subsec. (g).
Cited by 6
(1) In general A plan maintained by an eligible employer described in subsection (e)(1)(A) shall not be treated as an eligible deferred compensation plan unless all assets and income of the plan described in subsection (b)(6) are held in trust for the exclusive benefit of participants and their beneficiaries.
Cited by 7
(2) Taxability of trusts and participants For purposes of this title—
(A) a trust described in paragraph (1) shall be treated as an organization exempt from taxation under section 501(a), and
(B) notwithstanding any other provision of this title, amounts in the trust shall be includible in the gross income of participants and beneficiaries only to the extent, and at the time, provided in this section.
(3) Custodial accounts and contracts For purposes of this subsection, custodial accounts and contracts described in section 401(f) shall be treated as trusts under rules similar to the rules under section 401(f).
(4) Death benefits under USERRA-qualified active military service A plan described in paragraph (1) shall not be treated as an eligible deferred compensation plan unless such plan meets the requirements of section 401(a)(37).
Amended 2008
- 2008 Pub. L. 110-245 Pub. L. 110–245 added par. (4).