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Compensation Definition for ACP


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I have a document which specifically references the definition of compensation in the Definitions. Unfortunately, this definition of compensation excludes commission and bonuses. Two questions -- do I have to perform 414(s) testing and then use that (hopefully passing) compensation for my ACP test? and, do I have a document problem since the definition of compensation is so rigid?

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Well, you must follow the written terms of the plan. Documents are, typically, written in a manner to provide flexibility in the definition of Compensation that will be used for tested. However, for allocation purposes, the definition of Compensation must be very specific (as not to violate the definitely determinable formula rule). So, as to whether or not you may use 'any' definition of Compensation that satisfied 414(s) to test your plan, you may have to refer back to the document.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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