DEFINITION OF COMPENSATION FOR SECTION 415 PURPOSES.

SEC. 1434. DEFINITION OF COMPENSATION FOR SECTION 415 PURPOSES. (a) General Rule.— Section 415(c)(3) (defining participant’s compensation) is amended by adding at the end the following new subparagraph: “(D) Certain deferrals included.— The term ‘participant’s compensation’ shall include— “(i) any elective deferral (as defined in section 402(g)(3)), and “(ii) any amount which is contributed or deferred by the employer at the election of the employee and which is not includible in the gross income of the employee by reason of section 125 or 457.”. (b) Conforming Amendments.— (1) Section 414(q)(4), as redesignated by section 1431, is amended to read as follows: “(4) Compensation.— For purposes of this subsection, the term ‘compensation’ has the meaning given such term by section 415(c)(3).”. (2) Section 414(s)(2) is amended by inserting “not” after “elect” in the text and heading thereof. (c) Effective Date.— The amendments made by this section shall apply to years beginning after December 31, 1997. 110 STAT. 1808