New recovery method for joint and survivor annuity payments from qualified plans. For annuity starting dates beginning in 1998, a new method will be used to figure the tax-free portion of an annuity that is payable over the lives of more than one annuitant. Under this new recovery method, the number of anticipated monthly payments used to recover the tax-free investment in the contract (or basis) is determined by combining the ages of the annuitants.

Participant's compensation. Beginning in 1998, amounts deferred in certain employee benefit plans will increase the tax-deferred amount that can be contributed by the employer at the election of the employee. For more information, see Elective deferrals, later.

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