PUBLIC LAW 109–280—AUG. 17, 2006
120 STAT. 1059
‘‘(I) a local educational agency (as defined in section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801), or ‘‘(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) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code, and ‘‘(ii) makes payments or supplements described in subclauses (I) and (II) of subparagraph (A)(ii) in coordination with a defined benefit plan (as so defined) maintained by an eligible employer described in section 457(e)(1)(A) of such Code or by an education association described in clause (i)(II), shall be treated solely for purposes of subparagraph (A)(ii) as if it were a part of the defined benefit plan with respect to such payments or supplements. Payments or supplements under such a voluntary early retirement incentive plan shall not constitute severance pay for purposes of paragraph (2).’’. (b) EMPLOYMENT RETENTION PLANS.— (1) IN GENERAL.—Section 457(f)(2) of the Internal Revenue Code of 1986 (relating to exceptions) is amended by striking ‘‘and’’ at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting ‘‘, and’’, and by adding at the end the following: ‘‘(F) that portion of any applicable employment retention plan described in paragraph (4) with respect to any participant.’’. (2) DEFINITIONS AND RULES RELATING TO EMPLOYMENT RETENTION PLANS.—Section 457(f) of such Code is amended by adding at the end the following new paragraph: ‘‘(4) EMPLOYMENT RETENTION PLANS.—For purposes of paragraph (2)(F)— ‘‘(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). ‘‘(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 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801), or ‘‘(ii) an education association which principally represents employees of 1 or more agencies described in
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26 USC 457.
Applicability.
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