< Back to H.R. 4884 (109th Congress, 2005–2006)

Text of the No Special Deals for Executives Act of 2006

This bill was introduced on March 7, 2006, in a previous session of Congress, but was not enacted. The text of the bill below is as of Mar 7, 2006 (Introduced).

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Source: GPO

I

109th CONGRESS

2d Session

H. R. 4884

IN THE HOUSE OF REPRESENTATIVES

March 7, 2006

introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to include in gross income the value of assets set aside under an employer nonqualified deferred compensation plan when the employer defined benefit plan has a funding target attainment percentage of less than 80 percent.

1.

Short title

This Act may be cited as the No Special Deals for Executives Act of 2006.

2.

Treatment of nonqualified deferred compensation plans when employer defined benefit plan has funding target attainment percentage of less than 80 percent

(a)

In general

Subsection (b) of section 409A of the Internal Revenue Code of 1986 (providing rules relating to funding) is amended by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively, and by inserting after paragraph (2) the following new paragraph:

(3)

When employer’s defined benefit plan has funding target attainment percentage of less than 80 percent

If—

(A)

as of the valuation date of a defined benefit plan to which section 412 applies for the plan year which includes any portion of a period in which the plan has a funding target attainment percentage less than 80 percent—

(i)

assets are set aside (directly or indirectly) in a trust (or other arrangement determined by the Secretary), or

(ii)

transferred to such a trust or other arrangement,

for purposes of paying deferred compensation under a nonqualified deferred compensation plan of the employer maintaining the defined benefit plan, or
(B)

a nonqualified deferred compensation plan of the employer provides that assets will become restricted to the provision of benefits under the plan in connection with such funding target attainment percentage of less than 80 percent (or other similar financial measure determined by the Secretary) of the defined benefit plan, or assets are so restricted,

such assets shall for purposes of section 83 be treated as property transferred in connection with the performance of services whether or not such assets are available to satisfy claims of general creditors. Subparagraph (A) shall not apply with respect to any assets which are so set aside before the defined benefit plan has a funding target attainment percentage of less than 80 percent.

.

(b)

Funding target attainment percentage

Section 409A(d) of such Code is amended by adding at the end the following new paragraph:

(7)

Funding target attainment percentage

(A)

In general

The funding target attainment percentage of a plan for a plan year is the ratio (expressed as a percentage) which—

(i)

the value of plan assets for the plan year (determined without regard to accumulated credits in excess of accumulated charges to the funding standard account under section 412), bears to

(ii)

the funding target of the plan for the plan year.

(B)

Funding target

Funding target of a plan for a plan year is the present value of all liabilities to participants and their beneficiaries under the plan for the plan year.

.

(c)

Conforming amendments

Paragraphs (4) and (5) of section 409A(b) of such Code, as redesignated by subsection (a) of this subsection, are each amended by striking paragraph (1) or (2) each place it appears and inserting paragraph (1), (2), or (3).

(d)

 Effective date

The amendments made by this section shall apply to transfers or reservations of assets after December 31, 2005.

(e)

Special rule for 2006

For purposes of determining if a plan has a funding target attainment percentage of less than 80 percent (within the meaning of section 409A of such Code, as added by this section) for any plan year beginning in 2006, such section shall be applied by substituting the plan’s modified funded current liability percentage for the plan’s funding target attainment percentage. For purposes of the preceding sentence, the term modified funded current liability percentage means the funded current liability percentage (as defined in section 412(l)(8) of such Code), reduced as described in subparagraph (E) thereof.