Compensation Ratio Test

[Guest Kimberly Flett]

Does anyone know if Prevailing Wages under Davis Bacon satisfy the 414(s) definition of compensation or do they need to be testing as an alternative definition of compensation under 414(s) using the compensation ratio test?

[jaemmons]

If the "prevailing wage" is met by contributing the necessary $'s to a MPPP, they are not included as compensation for 414(s) purposes but the contributions themselves need to be tested under 401(a)(4) for discrimination.

However, if the "prevailing wage" is paid to them as cash, then it counts as compensation under 414(s) much like any other remuneration an employee receives for credited services. With this said, if it is excluded for plan purposes, then you MUST perform the "diminimus" comp test you had eluded to in you posting.

[Guest Kimberly Flett]

thanks for your assistance.