Commission-Only Employees

[Guest Tad77]

For commission-only employees for whom hours of service are not kept, do you use equivalencies to count hours of service? Along similar lines, how are breaks in service calculated?

Are there any rules on when compensation should be included for plan purposes? Is the calculation of compensation on a cash basis (when paid) ok even if the commissions were earned in a prior plan year?

[K2retire]

How do you handle hours of service for salaried employees for whom hours are not recorded? The answer should be the same.

[Jim Chad]

I would love some clear answers on this...but have never found any.

FWIW I use monthly equivalence and I put it in my documents to do so. I treat the commission on a cash basis....strictly when they are paid. There is one exception. When employment is terminated and they do not work any hours that month, I do not count commissions.

I am going to be interested to hear how if others handle it the same way.

[Blinky the 3-eyed Fish]

New 415 regs tell exactly how to handle it.

[Jim Chad]

Blinky:

What is the best way to find that part of the final 415 regs?

I did a search for hours, commissions and salary and got some hits: but nothing useful.

[Blinky the 3-eyed Fish]

The point as brought up by K2 is that commissions are like other wages and are treated the same. The final 415 regs deal with how those wages are counted.

The orginal post asks about when to count the commissions, when paid? Answer: yes, just like you would count salary.

You state, "When employment is terminated and they do not work any hours that month, I do not count commissions", but you can't have that blanket policy. You must instead follow the doc, including the 415 amendment as written, to determine how that compensation is counted.