eTrade 2008 Annual Report Download - page 199

extent that the amounts are includible in gross income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan (as described in section
1.62-2(c) of the regulations)), and excluding the following:
For any Self-employed Individual, Compensation shall mean Earned Income.
For purposes of applying the limitations of this section, Compensation for a Limitation Year is the Compensation actually
paid or made available in gross income during such Limitation Year.
Compensation paid or made available during such Limitation Year shall include any elective deferral (as defined in Code
Section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Employee and
which is not includible in the gross income of the Employee by reason of Code Section 125, 132(f)(4), or 457.
For Limitation Years beginning on and after January 1, 2005, payments made within 2
1
/
2
months after Severance from
Employment will be Compensation if they are payments that, absent a Severance from Employment, would have been paid
to the Employee while the Employee continued in employment with the Employer and are regular compensation for
services during the Employee’s regular working hours, compensation for services outside the Employee’s regular working
hours (such as overtime or shift differential), commissions, bonuses, or other similar compensation, and payments for
accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use the leave if
employment had continued. Any payments not described above are not considered compensation if paid after Severance
from Employment, even if they are paid within 2
1
/ 2 months following Severance from Employment, except for payments
to an individual who does not currently perform services for the Employer by reason of qualified military service (within
the meaning of Code Section 414(u)(1)) to the extent these payments do not exceed the amounts the individual would have
received if the individual had continued to perform services for the Employer rather than entering qualified military
service.
(1) employer contributions to a plan of deferred compensation which are not included in the Employee’s gross income
for the taxable year in which contributed, or employer contributions under a simplified employee pension plan, or
any distributions from a plan of deferred compensation;
(2) amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
(3) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and
(4) other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity contract described in Code Section 403(b) (whether
or not the contributions are actually excludible from the gross income of the Employee).
RESTATEMENT DECEMBER 15, 2006
32 ARTICLE III (5-19047)