INCLUSION OF CERTAIN DEFERRED COMPENSATION IN DETERMINATION OF WAGE-BASED ADJUSTMENTS.

SEC. 10208. INCLUSION OF CERTAIN DEFERRED COMPENSATION IN DETERMINATION OF WAGE-BASED ADJUSTMENTS. (a) In General.—Section 209 of the Social Security Act (42 U.S.C. 409) is amended by adding at the end the following new subsection: 103 STAT. 2477 “(k)(1) For purposes of sections 203(f)(8)(B)(ii), 213(d)(2)(B), 215(a)(1)(B)(ii), 215(b)(3)(A)(n), 224(f)(2)(B), and 230(b)(2) (and 230(b)(2) as in effect immediately prior to the enactment of the Social Security Amendments of 1977), the term ‘deemed average total wages’ for any particular calendar year means the product of— “(A) the SSA average wage index (as defined in section 215(i)(1)(G) and promulgated by the Secretary) for the calendar year preceding such particular calendar year, and “(B) the quotient obtained by dividing— “(i) the average of total wages (as defined in regulations of the Secretary and computed without regard to the limitation specified in subsection (a)(1) and by including deferred compensation amounts) reported to the Secretary of the Treasury or his delegate for such particular calendar year, by “(ii) the average of total wages (as so defined and computed) reported to the Secretary of the Treasury or his delegate for the calendar year preceding such particular calendar year. “(2) For purposes of paragraph (1), the term ‘deferred compensation amount’ means— “(A) any amount excluded from gross income under chapter 1 of the Internal Revenue Code of 1986 by reason of section 402(a)(8), 402(h)(1)(B), or 457(a) of such Code or by reason of a salary reduction agreement under section 403(b) of such Code, “(B) any amount with respect to which a deduction is allowable under chapter 1 of such Code by reason of a contribution to a plan described in section 501(c)(18) of such Code, and “(C) to the extent provided in regulations of the Secretary, deferred compensation provided under any arrangement, agreement, or plan referred to in subsection (i) or (j).”. (b) Conforming Amendments.— (1) Sections 203(f)(8)(B)(ii), 215(b)(3)(A)(ii), and 230(b)(2)(A) of the Social Security Act (42 U.S.C. 403(i)(8)(B)(ii)(I), 415(b)(3)(A)(ii)(I), and 430(b)(2)(A)), as amended by subsection (d)(2)( A)(i). are each further amended— (A) by striking “the average of the total wages (as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1)) reported to the Secretary of the Treasury or his delegate” and inserting “the deemed average total wages (as defined in section 209(k)(1))”; (B) by striking “the average of the total wages (as so defined and computed) reported to the Secretary of the Treasury or his delegate” and inserting “the deemed average total wages (as so defined)”; and (C) in section 215(b)(3)(A)(ii)(B, by striking “(after 1976)”. (2) Sections 213(d)(2)(B), 215(a)(1)(B)(ii), and 224(f)(2)(B) of such Act (42 U.S.C. 413(d)(2)(B), 415(a)(1)(B)(u), and 424a(f)(2)(B)), as amended by subsection (d)(2)(A)(i), are each further amended— (A) by striking “the average of the total wages (as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1)) reported to the Secretary of the Treasury or his delegate” and inserting “the deemed average total wages (as defined in section 209(k)(1))”; 103 STAT. 2478 (B) in section 213(d)(2)(B) and 215(a)(1)(B)(ii)(n), by striking “(as so defined and computed)” and inserting “(as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1))”; and (C) in section 224(f)(2)(B)(ii), by inserting “(I)” after “(ii)”, by striking “as so defined and computed)” and inserting “(as defined in regulations of the Secretary and computed without regard to the limitations specified in section 209(a)(1))”, and by inserting after “disability)” the following: “, if such calendar year is before 1991, or (II) the deemed average total wages (as defined in section 209(k)(1)) for the calendar year before the year in which the reduction was first computed (but not counting any reduction made in benefits for a previous period of disability), if such calendar year is after 1990”. (3) Section 215(i)(1)(G) of such Act (42 U.S.C. 415(i)(1)(G)) is amended by striking “the average of the total wages reported to the Secretary of the Treasury or his delegate as determined for purposes of subsection (b)(3)(A)(ii)” and inserting “the amount determined for such calendar year under subsection (b)(3)(A)(ii)(I)”. (4) Section 215(a)(1)(C)(ii) of such Act (42 U.S.C. 415(a)(1)(C)(u)) is amended by striking “change.” and inserting “change (except that, for purposes of subsection (b)(2)(A) of such section 230 as so in effect, the reference therein to the average of the wages of all employees as reported to the Secretary of the Treasury for any calendar year shall be deemed a reference to the deemed average total wages (within the meaning of section 209(k)(1)) for such calendar year).”. (5) Section 230(d) of such Act (42 U.S.C. 430(d)) is amended by striking “change.” and inserting “change (except that, for purposes of subsection (b)(2)(A) of such section 230 as so in effect, the reference therein to the average of the wages of all employees as reported to the Secretary of the Treasury for any calendar year shall be deemed a reference to the deemed average total wage (within the meaning of section 209(k)(1)) for such calendar year).”. (c) Effective Date.— (1) In general.—The amendments made by subsections (a) and (b) shall apply with respect to the computation of average total wage amounts (under the amended provisions) for calendar years after 1990. (2) Transitional rule.— For purposes of determining the contribution and benefit base for 1990, 1991, and 1992 under section 230(b) of the Social Security Act (and section 230(b) of such Act as in effect immediately prior to enactment of the Social Security Amendments of 1977)— (A) the average of total wages for 1988 shall be deemed to be equal to the amount which would have been determined without regard to this paragraph, plus 2 percent of the amount which has been determined to the average of total wages for 1987, (B) the average of total wages for 1989 shall be deemed to be equal to the amount which would have been determined without regard to this paragraph, plus 2 percent of the amount which would have been determined to be the aver-103 STAT. 2479age of total wages for 1988 without regard to subparagraph (A), and (C) the average of total wages reported to the Secretary of the Treasury for 1990 shall be deemed to be equal to the product of— (i) the SSA average wage index (as defined in section 215(i)(1)(G) of the Social Security Act and promulgated by the Secretary) for 1989, and (ii) the quotient obtained by dividing— (I) the average of total wages (as defined in regulations of the Secretary and computed without regard to the limitations of section 209(a)(1) of the Social Security Act and by including deferred compensation amounts, within the meaning of section 209(k)(2) of such Act as added by this section) reported to the Secretary of the Treasury or his delegate for 1990, by (II) the average of total wages (as so defined and computed without regard to the limitations specified in such section 209(a)(1) and by excluding deferred compensation amounts within the meaning of such section 2O9(k)(2)) reported to the Secretary of the Treasury or his delegate for 1989. (3) Determination of contribution and benefit base for 1993.—For purposes of determining the contribution and benefit base for 1993 under section 230(b) of the Social Security Act (and section 230(b) of such Act as in effect immediately prior to enactment of the Social Security Amendments of 1977), the average of total wages for 1990 shall be determined without regard to subparagraph (C) of paragraph (2). (4) Revised determination under section 230 of the social, security act.—As soon as possible after the enactment of this Act, the Secretary of Health and Human Services shall revise and publish, in accordance with the provisions of this Act and the amendments made thereby, the contribution and benefit base under section 230 of the Social Security Act with respect to remuneration paid after 1989 and taxable years beginning after calendar year 1989. (d) Clerical Amendments.— (1) Designation of undesignated provisions.— Section 209 of the Social Security Act is further amended— (A) by redesignating paragraphs (1) through (9) of subsection (a) as subparagraphs (A) through (I), respectively; (B) by redesignating clauses (1) through (3) of subsection (b) as clauses (A) through (C), respectively; (C) by redesignating clauses (1) through (9) of subsection (e) as clauses (A) through (I), respectively; (D) by redesignating paragraphs (1) and (2) of subsection (f) as subparagraphs (A) and (B), respectively; (E) by redesignating paragraphs (1), (2), and (3) of subsection (g) as subparagraphs (A), (B), and (C), respectively; (F) in subsection (h), by redesignating clauses (i), (ii), and (iii) as clauses (I), (II), and (III), respectively, by redesignating subparagraphs (A) and (B) of paragraph (2) as clauses (i) and (ii), respectively, and by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively; 103 STAT. 2480 (G) by redesignating paragraphs (1) and (2) of subsection (l) as subparagraphs (A) and (B), respectively; (H) by redesignating paragraphs (1) and (2) of subsection (m) as subparagraphs (A) and (B), respectively; (I) by redesignating paragraphs (1) and (2) of subsection (p) as subparagraphs (A) and (B), respectively; (J) by redesignating subsections (a), (b), (d), (e), (f), (g), (h), (j), (k), Q), (m), (n), (o), (p), (q), (r), (s), and (t) (in the matter preceding subsection (k) added by subsection (a) of this section, and as amended by the preceding provisions of this paragraph) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), and (18), respectively; (K) by inserting “(a)” after “Sec. 209.”; (L) by striking “Nothing in the regulations” and inserting the following: “(b) Nothing in the regulations”; (M) in the undesignated paragraph commencing with “For purposes of this title, in the case of domestic service”, by inserting “(c) ” at the beginning thereof, and by striking “subsection (g)(2)” each place it appears and inserting “subsection (a)(6)(B)”; (N) in the undesignated paragraph commencing with “For purposes of this title, in the case of an individual performing service, as a member”, by inserting “(d)” at the beginning thereof, and by striking “subsection (a)” and inserting “subsection (a)(1)”; (O) by inserting “(e)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, in the case of an individual performing service, as a volunteer”; (P) by inserting “(f)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, tips received”; (Q) by inserting “(g)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, in any case where”; (R) by inserting “(h)” at the beginning of the undesignated paragraph commencing with “For purposes of this title, in the case of an individual performing service under the provisions”; (S) by inserting “(i)” at the beginning of the undesignated paragraph commencing with “Nothing in any of the foregoing”; and (T) by inserting “(j)” at the beginning of the undesignated paragraph commencing with “Any amount deferred”. (2) Conforming amendments.— (A) Title II of such Act is amended— (i) in sections 203(f)(8)(B)(ii)(I), 213(d)(2)(B), 215(a)(1)(B)(ii)(I), 215(b)(3)(A)(ii)(I), 224(f)(2)(B)(i), and 230(b)(2)(A) (42 U.S.C. 403(f)(8)(B)(ii)(I), 413(d)(2)(B), 415(a)(1)(B)(ii)(I), 415(b)(3)(A)(ii)(I), 424a(f)(2)(B)(i), and 430(b)(2)(A)), by striking “section 209(a)” and inserting “section 209(a)(1)”; (ii) in section 203(f)(5)(C), by striking “subsections (a), (g)(2), (g)(3), (h)(2), and (j) of section 209” and inserting “paragraphs (1), (6)(B), (6)(C), (7)(B), and (8) of section 209(a)”; 103 STAT. 2481 (iii) in clauses (B) and (C) of the last sentence of section 224(a), by striking “209(a)” and inserting “209(a)(1)”; (iv) in section 217(b)(1), by striking “209(e)(2)” and inserting “209(a)(4)(B)”; (v) in section 218(c)(5), by striking “paragraph (2) of section 209(h)” and inserting “subparagraph (B) of section 209(a)(7)”; and (vi) in section 203(f)(5)(C)(ii), by striking “209(m)(2)” and inserting “209(a)(11)(B)”. (B)(i) Section 6(f)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(f)(1)) is amended by striking “209(g)” and inserting “209(a)(6)”. (ii) Section 1(h)(5)(iii) of the Railroad Retirement Act of 1974 (45 U.S.C. 231(h)(5)(iii)) is amended by striking “the third paragraph of section 209” and inserting “section 209(d)”.