I 
109TH CONGRESS 
2D SESSION 
H. R. 4884 
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. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 7, 2006 
Mr. KENNEDY of Minnesota 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘No Special Deals for 
Executives Act of 2006’’. 
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SEC. 2. TREATMENT OF NONQUALIFIED DEFERRED COM-
PENSATION PLANS WHEN EMPLOYER DE-
FINED 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 relat-
ing 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 para-
graph: 
‘‘(3) WHEN
EMPLOYER’S
DEFINED
BENEFIT 
PLAN HAS FUNDING TARGET ATTAINMENT PERCENT-
AGE 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 attain-
ment percentage less than 80 percent— 
‘‘(i) assets are set aside (directly or 
indirectly) in a trust (or other arrange-
ment 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 
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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 de-
termined by the Secretary) of the defined ben-
efit plan, or assets are so restricted, 
such assets shall for purposes of section 83 be treat-
ed 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 per-
centage 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 PERCENT-
AGE.— 
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‘‘(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 accumu-
lated charges to the funding standard ac-
count 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 bene-
ficiaries 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 as-
sets after December 31, 2005. 
(e) SPECIAL RULE FOR 2006.—For purposes of de-
termining if a plan has a funding target attainment per-
centage of less than 80 percent (within the meaning of 
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section 409A of such Code, as added by this section) for 
any plan year beginning in 2006, such section shall be ap-
plied by substituting the plan’s modified funded current 
liability percentage for the plan’s funding target attain-
ment 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. 
Æ 
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