Plan compensation defined per A.A.

[Lori H]

Comp is based on plan year and with respect to any participant means: "Wages, tips and other compensation on Form W-2". I gather this means Box 1 on W-2, yes?

However, the only adjustment to compensation is "excluding comp paid during the determination period while not a participant in any component of the plan for which the definition applies" Therefore, mid plan year entry would exclude compensation earned prior to that entry date.

Since "including Salary deferrals" was not checked as an adjustment then comp for plan purposes would be W-2 Box 1 less deferrals, correct? i.e. $10K Box 1 W-2 less $2K deferral would be $8K for plan purposes? Therefore potentially lowering match funding for participants who did not exceed 401(a)17.

[BG5150]

I think you have to check state by state. NJ doesn't include Sec. 125 in Box 1. Other states do. I am always wary of using W2's to verify compensation.

And find out if the client really wanted to exclude 401(k), etc. from comp. i don't think I ever purposely did not include it.

[david rigby]

...then comp for plan purposes would be W-2 Box 1 less deferrals, correct?

Doesn't Box 1 already exclude all deferrals?

Perhaps you mean "Box 1 less comp prior to entrydate"?

[PensionPro]

If the plan does not add back the deferrals, then compensation is box 1. Why would pre-tax 125 deferrals be included in box 1 in any state? Which states include pre-tax 125 deferrals in box 1?

[Lori H]

...then comp for plan purposes would be W-2 Box 1 less deferrals, correct?

Doesn't Box 1 already exclude all deferrals?

Perhaps you mean "Box 1 less comp prior to entrydate"?

you are correct. sorry for the confusion

[rcline46]

The quoted definition in the OP is not quite right. He left out 'reportable'. Also the final 415 regs brought deferrals back into the definiton of 'W-2' pay in 2008. We find it quite rare to get proper plan compensation from ANYWHERE on the actual W-2. Sometimes the Medicare wages are close, but only if the company does not have a 125 plan.

[K2retire]

The quoted definition in the OP is not quite right. He left out 'reportable'. Also the final 415 regs brought deferrals back into the definiton of 'W-2' pay in 2008. We find it quite rare to get proper plan compensation from ANYWHERE on the actual W-2. Sometimes the Medicare wages are close, but only if the company does not have a 125 plan.

Although I've found W-2s to be more reliable than most clients...

[Lori H]

The quoted definition in the OP is not quite right. He left out 'reportable'. Also the final 415 regs brought deferrals back into the definiton of 'W-2' pay in 2008. We find it quite rare to get proper plan compensation from ANYWHERE on the actual W-2. Sometimes the Medicare wages are close, but only if the company does not have a 125 p

The gender of the OP is not quite right. And fyi the word 'reportable' is nowhere in the def of comp, if it states "wages, tips and other compensation on Form W-2" then that is Box 1 on the W-2.

[rcline46]

In our documents, when 'W-2 income' is selected, it refers to:

Information required to be reported under Code Sections 6041, 6051 and 6052 (Wwages, tips and other compesation as REPORTED on form W-2). Compensation means wages, with the meaning of Code Section 3401(a), and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business)( for which the Employer is required to furnish the Employee a written statement under Code Sectios 6041(d), 6051(a)(3) and 6052. Compensation must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)).

So, the OP left out REPORTED from the standard definition, or the document they are reviewing is deficient in respect to the LRMs. The unfortunate fact is that sometimes, pay that is to be reported on a W-2 is not reported due to other requirements or exceptions in othe regulations. Way back when, when W-2 pay was introduced, it was Box 10 on the W-2. However that went away a long time ago, and Box 10 is no longer relevant or usable, but the W-2 title stuck. The result is that determining compensation is no longer a simple task, and plan amendments such as the final 415 regulations requires a much more detailed examination of the document and the payroll records of a client to get the answer. It just ain't that simple any more.