[Code of Federal Regulations]
[Title 26, Volume 6]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.457-3]

[Page 159]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
DEFERRED COMPENSATION, ETC.--Table of Contents
 
Sec. 1.457-3  Tax treatment of participants where plan is not an eligible plan.

    (a) In general. If a State (within the meaning of Sec. 1.457-2(c)) 
provides for a deferral of compensation (after the effective date 
described in paragraph (c)) under any agreement or arrangement described 
in Sec. 1.457-2(b) that is not an eligible plan within the meaning of 
Sec. 1.457-2--
    (1) Compensation deferred under the agreement or arrangement shall 
be includible in the gross income of the participant of beneficiary for 
the first taxable year in which there is no substantial risk of 
forfeiture (within the meaning of section 457(e)(3)) of the rights to 
such compensation,
    (2) Earnings credited on the compensation deferred under the 
agreement of arrangement shall be includible in the gross income of the 
participant or beneficiary only when paid or made available, provided 
that the interest of the participant or beneficiary in the assets 
(including amounts deferred under the plan) of the entity sponsoring the 
plan is not senior to the entity's general creditors, and
    (3) Amounts paid or made available under the plan to a participant 
or beneficiary shall be taxable to the participant or beneficiary under 
section 72, relating to annuities.
    (b) Exceptions. Paragraph (a) does not apply with respect to--
    (1) A plan described in section 401(a) which includes a trust exempt 
from tax under section 501(a),
    (2) An annuity plan or contract described in section 403,
    (3) A qualified bond purchase plan described in section 405(a),
    (4) That portion of any plan which consists of a transfer of 
property described in section 83, and
    (5) That portion of any plan which consists of a trust to which 
section 402(b) applies.
    (c) Effective date. This section is effective for taxable years 
beginning after December 31, 1981. For rules applicable in taxable years 
beginning after December 31, 1978, and before January 1, 1982, see 
Sec. 1.457-4.

[T.D. 7836, 47 FR 42341, Sept. 27, 1982; 47 FR 46497, Oct. 19, 1982]