To amend the Internal Revenue Code of 1986 to provide that cafeteria plans which provide for grandfathered 401(k) plans may also provide for contributions to section 457 plans.

Amends the Internal Revenue Code to allow a cafeteria plan to include an eligible deferred compensation plan if the cafeteria plan also provides for a qualified cash or deferred arrangement adopted by a State or local government or political subdivision before May 6, 1986.