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97 STAT. 122 PUBLIC LAW 98-21—APR. 20, 1983 AMOUNTS RECEIVED UNDER CERTAIN DEFERRED COMPENSATION AND SALARY REDUCTION ARRANGEMENTS TREATED AS WAGES FOR FICA TAXES 26 use 3121. SEC. 324. (a)(1) Section 3121 of the Internal Revenue Code of 1954 (relating to definitions) is amended by adding at the end thereof the following new subsection: "(v) TREATMENT OF CERTAIN DEFERRED COMPENSATION AND SALARY REDUCTION ARRANGEMENTS.— "(1) CERTAIN EMPLOYER CONTRIBUTIONS TREATED AS WAGES.— Nothing in any paragraph of subsection (a) (other than para- graph (1)) shall exclude from the term 'wages'— "(A) any employer contribution under a qualified cash or deferred arrangement (as defined in section 401(k)) to the extent not included in gross income by reason of section 402(aX8), or "(B) any amount treated as an employer contribution under section 414(h)(2). "(2) T R E A T M E N T O F CERTAIN N O N Q U A L I F I E D DEFERRED COMPEN- SATION PLANS.— "(A) IN GENERAL.—Any amount deferred under a non- qualified deferred compensation plan shall be taken into account for purposes of this chapter as of the later of— "(i) when the services are performed, or "(ii) when there is no substantial risk of forefeiture of the rights to such amount. "(B) TAXED ONLY ONCE.—Any amount taken into account as wages by reason of subparagraph (A) (and the income attributable thereto) shall not thereafter be treated as wages for purposes of this chapter. "(C) NONQUALIFIED DEFERRED COMPENSATION PLAN.—For purposes of this paragraph, the term 'nonqualified deferred compensation plan' means any plan or other arrangement for deferral of compensation other than a plan described in subsection (a)(5). "(3) EXEMPT GOVERNMENTAL DEFERRED COMPENSATION PLAN.— For purposes of subsection (a)(5), the term 'exempt governmen- tal deferred compensation plan' means any plan providing for deferral of compensation established and maintained for its employees by the United States, by a State or political subdivi- sion thereof, or by an agency or instrumentality of any of the foregoing. Such term shall not include— "(A) any plan to which section 83, 402(b), 403(c), 457(a), or 457(e)(1) applies, and "(B) any annuity contract described in section 403(b)." (2) Paragraph (5) of section 3121(a) of such Code (defining wages) is amended— (A) by striking out "or" at the end of subparagraph (C), (B) by striking out the semicolon at the end of subparagraph (D) and inserting in lieu thereof a comma, and (C) by adding at the end thereof the following new subpara- graphs: "(E) under or to an annuity contract described in section 403(b), other than a payment for the purchase of such contract which is made by reason of a salary reduction agreement (whether evidenced by a written instrument or otherwise),