I am looking for authority to explain the treatment of severance pay when determining final average pay. Plan language definition of annual comp is w-2 wages plus elective deferrals. This would include severance pay. That result seems wrong. What am I missing? Thanks.

What is the exact definition? Is it W-2 compensation while an employee for example?

"Wages within the meaning of Code Section 3401(a) and all other payments of compensation to an employee by the Company (in the course of the Complany's trade or business) for which the Company is requred to furnish the Participant a written statement under Code Sections 6041(d), 6051(a)(3) and 6052" add back of 125 and 402(e)(3) deferrals comes later.

You may wish to review the 415 reg (issued March/April 2007):
http://a257.g.akamaitech.net/7/257/2422/01...pdf/E7-5750.pdf

Begin about page 40, and pay particular attention to the discussion about compensation after severance of employment.

Thank you.