explaining the definition of compensation

[K2retire]

When the plan defines compensation as W-2 comp, the payroll division of our company is including everything that goes on a W-2 in the contribution deposits that they make for the clients. Unfortunately, that includes the taxable company paid health insurance premiums that are added to the taxable compensation for the greater than 2% shareholders of S corporations. They are now asking me for proof that it is not supposed to be included, and I'm having trouble finding it. Where should I be looking?

[ETA Consulting LLC]

I'm 'shooting from the hip' on this, but one of the main differences between W-2 wages and Withholding wages is the inclusion of amounts in income that aren't necessarily subject to withholding at the time they are incurred. Such items 'may' be a car allowance; or items that are generally added to Compensation after the year. Often, a reliable measure of withholding wages would be the amounts included on your last checkstub of the year.

Again, I'm just shooting 'loosely' from the hip on this without going into the detailed analysis of Compensation definitions.

Good Luck!

[Belgarath]

Is there any reason to think it would be excluded, in the absence of a specific modification to W-2 definition in the Plan? Seems to me that it should be included.

This is just my own "from the hip" take on the subject - haven't done any research.

[david rigby]

Are you assuming the "payroll division" is incorrect? Wouldn't the plan document be the proper place to look for the plan's definition?

Alternaitively, if you want a different definition, perhaps the best documentation is to amend the plan.

[K2retire]

It was my understanding that the health insurance premiums paid by the company that are taxable to Subchapter S shareholders who own more than 2% are not permitted to be included in plan compensation.