SAR SEP Compensation Definition

[rfahey]

Client has an old sarsep plan with a major mutual fund company.

Employees in the plan do salary deferrals and also contribute to an Health Savings Account ( HSA).

Social security wages include the sarsep deferrals but do not include HSA contributions ( no SS contributions on HSA contributions).

How does the HSA play into the definition of compensation for the sarsep plan ?

Do I take the social security wages and add back HSA contributions ?

THank you.

[PensionPro]

Maybe you can clarify your question. I thought employee contributions to an HSA are includible in income as employee wages, and subject to social security and medicare taxes -- unless the contributions are made through a cafeteria plan.

[rfahey]

Maybe you can clarify your question. I thought employee contributions to an HSA are includible in income as employee wages, and subject to social security and medicare taxes -- unless the contributions are made through a cafeteria plan.

These HSA contributions are being made via a cafeteria plan I believe so their contributions are deductible for both income taxes and social security taxes.

So my question is in order to calculate compensation for this plan do I take social security ( or medicare if higher ) wages and add bac the HSA contributions ?

If this is how it is done in 401k plans then perhaps it is the same for SAR SEP plans ???

[PensionPro]

I believe model SARSEPs exclude cafeteria contributions from compensation definition. However, cafeteria contributions are included in compensation for determining excludable employees.