Sick Pay/Short Term Disability

[Guest CharlieLaur]

The Profit Sharing Plan defines compensation as the W-2 Compensation reportable in Box 1.

Employee is absent from work for three or four months during the plan year due to sickness and receives sick pay (short term disability) during the absence from a third-party insurer.

If the sick pay is reported on the W-2 by the employer along with her other compensation for the year, is the sick pay included in determining her share of the employer contribution for the plan year?

Alternatively, if a separate W-2 for the sick pay is provided by the third party insurer, does this change the treatment of the sick pay?

[Guest FormsRmylife]

Short term disability is a payroll practice, non-ERISA plan benefit, whether the employer pays it from general assets or through an insurer. For this reason, I have always included it in compensation under the retirement plan as a part of W-2 wages. After all, the insurer issues the W-2 on behalf of the employer's wage obligation.