THE READER'S DIGEST ASSOCIATION, INC.
            DEFERRED COMPENSATION PLAN FOR DIRECTORS
           (Amended and Restated as of March 13, 1998)
                                
                            ARTICLE I
                                
                             Purpose

           The  purpose  of  the Deferred Compensation  Plan  for
Directors  (the "Plan") of The Reader's Digest Association,  Inc.
(the "Company") is to offer non-employee members of the Company's
Board  of  Directors  (the  "Board"), the  opportunity  to  defer
receipt  of  cash  payments  made under  the  Company's  Director
Compensation  Program  (the  "Program")  which  they  may  become
entitled to, under terms advantageous to both such Directors  and
the  Company, for the periods provided in the Plan.  The Plan was
initially adopted effective September 7, 1990.  The Board adopted
the Plan, as amended and restated, effective March 13, 1998.


                           ARTICLE II

                          Definitions


           For  purposes of this Plan, the following terms  shall
have the following meanings:

           2.1   "Account"  shall have the meaning  specified  in
Section 4.1.

           2.2   "Award" shall mean (a) prior to March 13,  1998,
the  annual retainer but not meeting fees for attendance at Board
or  Committee meetings to which a Participant may become entitled
as a non-employee Director of the Company and (b) after March 13,
1998,  the  cash payments made under Sections 3(b), 4(b)(ii)  and
5(b)(ii)  of  the  Program  to which  a  Participant  may  become
entitled as a non-employee Director of the Company.

           2.3   "Beneficiary" shall mean the person  or  persons
designated  from  time  to  time in a writing  delivered  to  the
Committee  by a Participant to receive payments under  this  Plan
after  the  death of such Participant or, in the absence  of  any
such  designation or in the event that such designated person  or
persons  shall  predecease  such Participant,  the  Participant's
estate or legal representative.

           2.4   "Committee" shall have the meaning specified  in
Section 6.1.

           2.5  "Deferred Amount" shall mean at any time the  sum
of   all  of  a  Participant's  Deferred  Compensation  plus  all
Increments  credited  as  of such date to  the  Account  of  such
Participant, as provided herein.

          2.6  "Deferred Compensation" shall mean that portion of
each  Award  to which a Participant is entitled, the  payment  of
which he has elected to defer under this Plan.

           2.7   "Designated  Deferral  Period"  shall  have  the
meaning specified in Section 3.1.

           2.8   "Designated  Pay-Out Schedule"  shall  have  the
meaning specified in Section 3.1.

           2.9   "Designated Percentage" shall have  the  meaning
specified in Section 3.1.

           2.10  "Election Date" shall have the meaning specified
in Section 3.2.

           2.11  "Eligible Director" shall mean any  non-employee
Director  of the Company.  A non-employee Director is any  person
who  is a member of the Board and who is not a full-time employee
of the Company or any of its subsidiaries.

           2.12 "Increments" shall have the meaning specified  in
Section 4.2.

           2.13 "Measuring Year" shall have the meaning specified
in Section 3.2.

           2.14 "Participant" shall mean any Eligible Director on
any  date  which  is  an Election Date for any  Award  which,  if
thereafter  made or earned, will be made or earned in respect  of
the  calendar  year  following the calendar  year  in  which  the
Election  Date  occurs or such other period as the Committee  may
designate.

           2.15  "Plan  Interest  Rate" shall  have  the  meaning
specified in Section 4.3.

                          ARTICLE III

                       Deferral of Awards

           3.1  Election.  Each Participant may elect to have the
payment of a Designated Percentage of each Award for which he  is
eligible deferred pursuant to this Plan for a Designated Deferral
Period   with  a  Designated  Pay-Out  Schedule.   A  "Designated
Percentage"  shall  mean  the percentage  of  50%,  75%  or  100%
selected   by  the  Participant  for  a  particular   Award.    A
"Designated  Deferral  Period" shall mean one  of  the  following
periods  following  the  date  the  Deferred  Compensation  would
otherwise have been payable, as selected by the Participant for a
particular   Award:    (i)   until  January   1   following   the
Participant's termination of services as a Director or (ii) until
January  1  of the year following the expiration of a  designated
number  of  years  following  the  Participant's  termination  of
services  as a Director as specified in the election  form  filed
with  the Committee, which year shall not exceed five years  from
the  January 1 of the year following the date of termination.   A
"Designated Pay-Out Schedule" shall mean one of the following, as
selected  by  the  Participant for a  particular  Award:   (i)  a
lump-sum  pay-out  in  the  January  following  the  end  of  the
Designated  Deferral  Period;  or  (ii)  a  pay-out   in   annual
installments of from one to ten years in the January of each such
year  following  the  end of the Designated  Deferral  Period  in
accordance with the following method with respect to each Award:

               INSTALLMENT METHOD WITH RESPECT TO AN AWARD

                For  a  multi-year installment election
          where  x  is  the  number  of  years  in  the
          Designated Deferral Period:

                1st payment is 1/x times the Deferred Amount
          then  credited to such Participant's Account  with
          respect to such Award,

                2nd  payment  is  1/x-1 times  the  Deferred
          Amount then credited to such Participant's Account
          with respect to such Award,

                3rd  payment  is  1/x-2 times  the  Deferred
          Amount then credited to such Participant's Account
          with respect to such Award,

                And so on, decreasing the denominator of the
          fraction by one for each year until the final year
          for  which  the  payment is  the  balance  of  the
          Deferred    Amount   then   credited    to    such
          Participant's Account with respect to such Award;

A  numerical  example of a Pay-Out Schedule over  five  years  is
attached  as  Exhibit A.  A separate election shall be  made  for
each  Award and shall be delivered to the Committee on or  before
the Election Date for such Award in accordance with Section 3.2.

           3.2  Deferral Election.  An election under Section 3.1
shall  be  in  writing  on  a form prescribed  by  the  Committee
delivered  to the person designated by the Company on  or  before
the Election Date.  The "Election Date" for an Award shall be the
December 31 prior to the calendar year of the Company in  respect
of  which such Award is earned (the "Measuring Year") even if the
Award  would ordinarily be payable in the calendar year following
the  Measuring Year; provided, however, in the year in which this
amended  and  restated Plan is adopted, an Eligible Director  may
elect,  on  or prior to March 31, 1998 (the "Election Date"),  to
defer  the  Award payable under Section 5(b)(ii) of the  Program;
provided further, however, that in the case of a person  who  has
been  advised that he will become an Eligible Director to  assume
office after January 1 of any year, such person may elect, on  or
prior  to the last day of the month following his election  as  a
Director (the "Election Date"), to defer the Award earned or made
following  such  Election  Date.   Each  written  election  shall
specify which Designated Percentage of the Award covered  by  the
election  the  Participant desires to  have  deferred  and  which
Designated  Deferral Period and Designated Pay-Out Schedule  will
apply.  An election, once made, shall be irrevocable.


                           ARTICLE IV

                 Treatment of Deferred Amounts

           4.1   Memorandum Account.  The Company shall establish
on  its  books  a  memorandum account (the  "Account")  for  each
Participant  who  has  Deferred  Compensation  under  this  Plan.
Immediately following the date on which any Deferred Compensation
would  otherwise be payable to a Participant as part of an Award,
the  amount  of such Deferred Compensation shall be  credited  to
such Participant's Account.

           4.2   Increments.   On the last day of  each  calendar
quarter, interest shall be credited to each Participant's Account
(an  "Increment"), computed separately for each Account,  on  the
balance  (if any ) of such Account as of such date, exclusive  of
interest previously credited during such fiscal year, at the Plan
Interest Rate.  Interest shall be compounded annually as of  each
September 30.

           4.3   Plan  Interest Rate.  The "Plan  Interest  Rate"
shall  be designated by the Committee as of the last day of  each
calendar quarter.  Such interest rates may be designated  by  the
Committee on any reasonable basis and such designations  made  in
good faith shall be final.

            4.4   Assets.   No  assets  shall  be  segregated  or
earmarked  in  respect of any Deferred Amount and no  Participant
shall  have  any right to assign, transfer, pledge or hypothecate
his  interest, or any portion thereof, in his Account.  The  Plan
and  the  crediting of Accounts hereunder shall not constitute  a
trust  and  shall  be  merely for the  purpose  of  recording  an
unsecured contractual obligation.

           4.5  Reports.  Until the entire Deferred Amount in  an
Account shall have been paid in full, the Company will furnish to
each  Participant  a  report, at least  annually,  setting  forth
transactions in such Account and the status of his Account.

                           ARTICLE V

                  Payment of Deferred Amounts

          5.1  Form of Payment.  All payments of Deferred Amounts
under this Plan shall be made in cash.

           5.2   Payment of Deferred Amount.  The Deferred Amount
credited to each Participant's Account with respect to any  Award
(including  all Increments attributable to such Award)  shall  be
payable  to  such Participant, in accordance with the  Designated
Pay-Out  Schedule,  commencing the January immediately  following
the end of the Designated Deferral Period elected with respect to
such Award.  If a Participant dies prior to payment of all or any
portion  of  the  Deferred  Amount, the  entire  Deferred  Amount
credited  to  such  Participant's Account shall  (if  not  sooner
payable)  be  payable to his Beneficiary in accordance  with  the
Designated  Pay-Out  Schedule commencing the January  immediately
following  the Participant's death; provided, however,  that  the
Committee may, in its sole discretion, accelerate the payment  of
the  entire Deferred Amount in a lump-sum in January of the  year
immediately following the date of such death.

           5.3   Acceleration  of Payments.  Notwithstanding  any
other  provision of this Plan to the contrary, the  Committee  or
the  Company, in its sole discretion, is empowered to  accelerate
the  payment  of  Deferred Amounts to a  Participant  or  to  all
Participants,  in  the  event  of  substantial  hardship   to   a
Participant arising out of mental or physical disability  of  the
Participant or an immediate family member, death of an  immediate
family member or such other cause as the Committee or the Company
shall  in  its sole discretion determine to constitute  hardship.
Neither  the Company nor the Committee shall have any  obligation
to  make  any such acceleration for any such reason or any  other
reason.

                           ARTICLE VI

                         Administration

           6.1   Committee.   The Plan shall be administered  and
interpreted  by a committee appointed from time to  time  by  the
Board  (the "Committee") and consisting of two or more  Directors
who  are  not Eligible Directors.  The Committee shall have  full
authority  to construe and interpret the terms and provisions  of
the  Plan, to adopt, alter and repeal such administrative  rules,
guidelines  and practices governing this Plan and to perform  all
acts,    including   the   delegation   of   its   administrative
responsibilities as it shall, from time to time, deem  advisable,
and  to otherwise supervise the administration of this Plan.  The
Committee  may  correct  any  defect,  supply  any  omission   or
reconcile  any  inconsistency in the Plan,  or  in  any  election
hereunder,  in  the  manner  and to  the  extent  it  shall  deem
necessary   to  carry  the  Plan  into  effect.   Any   decision,
interpretation or other action made or taken in good faith by  or
at  the direction of the Company, the Board, or the Committee (or
any of its members) arising out of or in connection with the Plan
shall  be within the absolute discretion of all and each of them,
as the case may be, and shall be final, binding and conclusive on
the   Company  and  all  employees  and  Participants  and  their
respective  heirs,  executors,  administrators,  successors   and
assigns.

          6.2  Liability.  No member of the Board, no employee of
the  Company  and no member of the Committee (nor  the  Committee
itself)  shall be liable for any act or action hereunder, whether
of  omission or commission, by any other member or employee or by
any agent to whom duties in connection with the administration of
the   Plan  have  been  delegated  or,  except  in  circumstances
involving his bad faith, gross negligence or fraud, for  anything
done  or  omitted  to  be done by himself.  The  Company  or  the
Committee may consult with legal counsel, who may be counsel  for
the Company or other counsel, with respect to its obligations  or
duties hereunder, or with respect to any action or proceeding  or
any  question of law, and shall not be liable with respect to any
action  taken  or  omitted by it in good faith  pursuant  to  the
advice of such counsel.


                          ARTICLE VII

                         Miscellaneous

           7.1   Amendment  or Termination.  Notwithstanding  any
other provision of this Plan, the Board may at any time, and from
time  to  time,  amend, in whole or in part, any or  all  of  the
provisions  of  the  Plan, or suspend or terminate  it  entirely,
retroactively  or otherwise; provided,  however,  that  any  such
amendment,  suspension  or  termination  may  not,  without   the
Participant's  consent,  adversely  affect  any  Deferred  Amount
credited  to  him  for  any  calendar year  ended  prior  to  the
effective  date  of  such amendment, suspension  or  termination.
Notwithstanding the foregoing, upon any termination of this Plan,
the  Board  may in its sole discretion accelerate the payment  of
all  Deferred  Amounts credited as of the date of termination  of
this  Plan.   The  Plan shall remain in effect  until  terminated
pursuant to this Section.

           7.2   Expenses.   The Company will bear  all  expenses
incurred in administering this Plan.

           7.3  Withholding.  The Company shall have the right to
deduct from any payment to be made pursuant to this Plan,  or  to
otherwise  require prior to the payment of any amount  hereunder,
payment by the Participant of, Federal, state or local taxes,  if
any, required by law to be withheld.

            7.4   No  Obligation.   Neither  this  Plan  nor  any
elections hereunder shall create any obligation on the Company to
continue any existing Award plans or policies or to establish  or
continue  any  other  programs, plans or policies  of  any  kind.
Neither  this  Plan nor any election made pursuant to  this  Plan
shall  give any Participant any right with respect to continuance
as  a Director by the Company, nor shall there be a limitation in
any  way  on the right of the Company to terminate the Director's
service   with  the  Board  in  accordance  with  the   Company's
Certificate of Incorporation and by-laws.

           7.5   No  Assignment.  Except by will or the  laws  of
descent and distribution, no right or interest in any Account  or
Deferred   Amount  under  this  Plan  shall  be   assignable   or
transferable, and no right or interest of any Participant in  any
Account  hereunder or to any Deferred Amount shall be subject  to
any lien, obligation or liability of such Participant.

           7.6  Applicable Law.  This Plan and the obligations of
the  Company hereunder shall be subject to all applicable Federal
and  state  laws, rules and regulations and to such approvals  by
any governmental or regulatory agency as may from time to time be
required.  The Board may make such changes in this Plan as may be
necessary  or desirable, in the opinion of the Board,  to  comply
with  the  laws,  rules and regulations of  any  governmental  or
regulatory  authority, or to be eligible for tax  benefits  under
the  Internal Revenue Code of 1986, as amended, or any other laws
or   regulations  of  any  Federal,  state,  local   or   foreign
government.

           7.7   Governing Law.  This Plan and actions  taken  in
connection  herewith  shall  be  governed  by  and  construed  in
accordance with the laws of the State of New York (regardless  of
the  law  that might otherwise govern under applicable  New  York
principles of conflict of laws).

          7.8  Construction.  Wherever any words are used in this
Plan  in  the masculine gender they shall be construed as  though
they  were  also used in the feminine gender in all  cases  where
they  would so apply, and wherever any words are used  herein  in
the  singular  form they shall be construed as though  they  were
also  used in the plural form in all cases where they   would  so
apply.   The titles to sections of this Plan are intended  solely
as  a convenience and shall not be used as an aid in construction
of any provisions thereof.

           7.9.  Name.  This Plan, as amended and restated, shall
be  known  as  "The  Reader's Digest Association,  Inc.  Deferred
Compensation Plan for Directors".

                           EXHIBIT A


Example of Pay-Out Over Five Years

Balance 01/05/92                                        50,000.00
Payment - January, 1992                                -10,000.00
                                                        40,000.00

Increments to 01/05/93                                   3,600.00
  (assumes 9%)                                          43,600.00

Payment - January, 1993                                 10,900.00
                                                        32,700.00

Increments to 01/05/94                                   2,616.00
  (assumes 8%)                                          35,316.00

Payment - January, 1994                                 11,772.00
                                                        23,544.00

Increments to 01/05/95                                   2,236.68
  (assumes 9.5%)                                        25,780.68

Payment - January, 1995                                 12,890.34
                                                        12,890.34

Increments to 01/05/96                                   1,031.23
  (assumes 8%)                                          13,921.57

Payment - January, 1996                                 13,921.57