92 STAT. 2782
PUBLIC LAW 95-600—NOV. 6, 1978 "(B) SUBSTANTIAL RISK OF FORFEITURE.—The rights of a
person to compensation are subject to a substantial risk of forfeiture if such person's rights to such compensation are conditioned upon the future performance of substantial services by any individual." (b) CLERICAL AMENDMENT.—The table of sections for such subpart B is amended by adding at the end thereof the following: 26 USC 457
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"Sec. 457. Deferred compensation plans with respect to service for State and local governments.". (c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 1978. (2) TRANSITIONAL RULES.—
Ante, p. 2779.
(A) IN GENERAL.—In the case of any taxable year beginning after December 31, 1978, and before January 1, 1982— (i) any amount of compensation deferred under a plan of a State providing for a deferral of compensation (other than a plan described in section 457(e)(2) of the Internal Revenue Code of 1954), and any income attributable to the amounts so deferred, shall be includible in gross income only for the taxable year in which such compensation or other income is paid or otherwise made available to the participant or other beneficiary, but (ii) the maximum amount of the compensation of any one individual which may be excluded from gross income by reason of clause (i) and by reason of section 457(a) of such Code during any such taxable year shall not exceed the lesser of— (I) $7,500, or (II) 33 Vs percent of the participant's includible compensation. (B) APPLICATION OF CATCH-UP PROVISIONS IN CERTAIN
CASES.—If, in the case of any participant for any taxable year, all of the plans are eligible State deferred compensation plans, then clause (ii) of subparagraph (A) of this paragraph shall be applied with the modification provided by paragraph (3) of section 457(b) of such Code. (C) APPLICATIONS OF CERTAIN COORDINATION PROVISIONS.—
26 USC 403. Ante, p. 2779.
In applying clause (ii) of subparagraph (A) of this paragraph and section 403(b)(2)(A)(ii) of such Code, rules similar to the rules of section 457(c)(2) of such Code shall apply. (D) MEANING OF TERMS.—Except as otherwise provided in
this paragraph, terms used in this paragraph shall have the same meaning as when used in section 457 of such Code. SEC. 132. CERTAIN PRIVATE DEFERRED COMPENSATION PLANS.
26 USC 451 ^^^^-
(a) GENERAL RULE.—The taxable year of inclusion in gross income of any amount covered by a private deferred compensation plan shall be determined in accordance with the principles set forth in regulations, rulings, and judicial decisions relating to deferred compensation which were in effect on February 1, 1978. (b) PRIVATE DEFERRED COMPENSATION PLAN DEFINED.—
(1) IN GENERAL.—For purposes of this section, the term "private deferred compensation plan" means a plan, agreement, or arrangement— , (A) where the person for whom the service is performed is not a State (within the meaning of paragraph (1) of section
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