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Differential Wage Payments


BTG

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Treasury Reg. 1.415©-2(e)(4) permits, but does not require, salary continuation payments to be included in 415 comp. Does HEART's requirement that differential wage payments be included in 415 comp negate the voluntary nature of 1.415©-2(e)(4)? Is there some difference between salary continuation payments and differential wage payments that I'm missing?

I've seen a number of discussions of the impact of this HEART requirement, but none that contain any discussion of its impact on 1.415©-2(e)(4).

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  • 2 weeks later...

As it turns out, I found the answer to my own question. Basically, since HEART provides that individuals receiving differential wage payments are treated as employed by the employer, these payments aren't post-severance compensation at all. Thus, the two provisions don't actually conflict. (However, HEART probably rendered 1.415©-2(e)(4) irrelevant.) Sungard has a good discussion of this issue here: http://www.relius.net/News/TechnicalUpdates.aspx?ID=409.

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