Clarification on Definition of W-2 Compensation

[Guest TPA4ADAY]

The definition of compensation in a plan document is W-2 Wages and is defined as follows: W-2 wages means wages for federal income tax withholding purposes, as defined under Code Section 3401(a), plus all other payments to an Employee in the course of the Employer's trade or business, for which the Employer must furnish the Employee a written statement under Code Sections 6041, 6051 and 6052, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of employment or services performed (such as the exception for agricultural labor in Code Section 3401(a)(2).

Client is a bank and bank purchases Bank Owned Life Insurance (BOLI) for some of their executives. In 2005, one of the executives retired and he received the benefit from the BOLI. His 2005 W-2 Box 1 (Wages, Tips and Other Comp) is $75,000and his 2005 W-2 Box 5 (medicare wages and tips) is in excess of $1 million because it includes the BOLI proceeds which are taxable.

Would you base a profit sharing contribution on $75,000 (Box 1) or Box 5 which would be maxed at $210,000 for 2005?