What is "base salary"?

[dv13]

Is there a regulation that defines "base salary" for purposes of a 409A elective account balance plan? I typically use a definition in my plan docs that describes what is versus what is not considered base salary, but I'm working with a takeover plan where the doc does not define base salary. The client continues to have fluctuations in contribution amounts due to PTO donations. They have always considered PTO as part of base salary. Is there any 409A standard definition or some other basis for me to look to? Thanks.

[XTitan]

Haven't thought of this situation before.  On one hand, the only definition of compensation n the 409A final regulations is under the determination for specified employees (§1.409A-1(i)(2)) which effectively permits usage of any of the 415 definitions, not that this has anything to do with your question.

On the other hand, §409A(a)(4)(B)(I) states

The requirements of this subparagraph are met if the plan provides that compensation for services performed during a taxable year may be deferred at the participant’s election only if the election to defer such compensation is made not later than the close of the preceding taxable year or at such other time as provided in regulations. [Emphasis mine]

You can dive into the final regs §1.409A-2(a) for the rules around initial deferral elections, but there is nothing substantive f the definition of compensation.  For me, I find it kind of hard to argue that donated PTO is compensation for services performed, but I also see that it runs through payroll just like other compensation so it would be difficult to differentiate.  Ultimately, what does the plan document say, and if the plan document is silent, what does counsel say?