You don't need all those separate variables. Try using an array or a hash instead, for instance:

while (<IN>) # Note: using $_ instead
{
    my (@two, @rest);
    chomp;
    @rest = split; # Note that this is the same as (split ' ', $_) .
                   # ' ' is generally a better choice than /\s/ for sp
+litting on
                   # whitespace.  If you need to count multiple spaces
+ as
                   # multiple fields, use /\s/ or / / instead.
    @two = splice @rest, 0, 2;
    print join(' ',@two,undef),join('|',@rest),"\n"; # The undef is to
+ put another space in before @rest
}
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See also splice split join perlop.