TREATMENT OF CERTAIN DEFERRED COMPENSATION AND SALARY REDUCTION ARRANGEMENTS UNDER RAILROAD RETIREMENT TAXES.

SEC. 10206. TREATMENT OF CERTAIN DEFERRED COMPENSATION AND SALARY REDUCTION ARRANGEMENTS UNDER RAILROAD RETIREMENT TAXES. (a) In General.—The second sentence of section 3231(e)(1) of the Internal Revenue Code of 1986 (defining compensation) is amended by striking “or (iii)” and inserting “(iii) and by inserting before the period or (iv) any remuneration which would not (if chapter 21 applied to such remuneration) be treated as wages (as defined in section 3121(a)) by reason of section 3121(a)(5)”. (b) Treatment of Certain Deferred Compensation and Salary Reduction Arrangements.—Subsection (e) of section 3231 of such Code is amended by adding at the end thereof the following new paragraph: “(9) Treatment of certain deferred compensation and salary reduction arrangements.— “(A) Certain employer contributions treated as compensation.—Nothing in any paragraph of this subsection (other than paragraph (2)) shall exclude from the term ‘compensation’ any amount described in subparagraph (A) or (B) of section 3121(v)(1). “(B) Treatment of certain nonqualified deferred compensation.—The rules of section 3121(v)(2) which apply for purposes of chapter 21 shall also apply for purposes of this chapter.”. (c) Effective Dates.— (1) Subsection (a).—The amendment made by subsection (a) shall apply to remuneration paid after December 31, 1989. (2) Subsection (b).— Except as otherwise provided in this subsection— (A) In general.—The amendment made by subsection (b) shall apply to— (i) remuneration paid after December 31, 1989, and (ii) remuneration paid before January 1, 1990, which the employer treated as compensation when paid. (B) Benefit determinations to take into account remuneration on which tax paid.—The term “compensa-103 STAT. 2476tion” as defined in section 1(h) of the Railroad Retirement Act of 1974 includes any remuneration which is included in the term “compensation” as defined in section 3231(e)(1) of the Internal Revenue Code of 1986 by reason of the amendment made by subsection (b). (3) Special rule for certain payments.—For purposes of applying the amendment made by subsection (b) to remuneration paid after December 31, 1989, which would have been taken into account before January 1, 1990, if such amendments had applied to periods before January 1, 1990, such remuneration shall be taken into account when paid (or, at the election of the payor, at the time which would be appropriate if such amendments had applied). (4) Exception for certain 401 (k) contributions.— The amendment made by subsection (b) shall not apply to employer contributions made during 1990 and attributable to services performed during 1989 under a qualified cash or deferred arrangement (as defined in section 401(k) of the Internal Revenue Code of 1986) if, under the terms of the arrangement as in effect on June 15, 1989— (A) the employee makes an election with respect to such contributions before January 1, 1990, and (B) the employer identifies the amount of such contribution before January 1, 1990. (5) Special rule with respect to nonqualified deferred compensation plans.—In the case of an agreement in existence on June 15, 1989, between a nonqualified deferred compensation plan (as defined in section 3121(v)(2)(C) of such Code) and an individual, the amendment made by subsection (b) shall apply with respect to services performed by the individual after December 31, 1989. The preceding sentence shall not apply in the case of a plan to which section 457(a) of such Code applies.