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Does anyone have the definitions of compensation in layman's terms (415, 6051, & 3401(a))? I am trying to give this to some clients and everything I can find is so long and technical that I am finding it hard to communicate the definition even though I have a good understanding of the subject.

Posted

I always start with the W-2 definition, which uses taxable compensation reported on the W-2 and which applies in most cases. It's also the one that most people understand. Then I describe the differences between that definition and the 415 definition and the withholding definition (stock options, group term life insurance, etc.). Sal Tripodi's ERISA book describes the differences (I think that it's at the end of the definition of compensation).

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