Terminated, severance through 12/31.

[K-t-F]

In the adoption agreement compensation is described as "W-2".  The Post-Severance box is not checked:

[  ] Include Post Severance Compensation in definition of Statutory Compensation.

So... if an employee terminates on say 10/1 but is receiving severance pay through the end of 2023, we don't count any income earned from 10/2 through the end of the year, correct?  AND, the employee can not defer from that severance compensation either, correct? 

[John Feldt ERPA CPC QPA]

Correct. True severance pay is not wages for plan purposes since it is not being paid for your services provided to the employer. Severance pay is an amount being paid to stop working, to be no longer employed, usually in exchange for your signature to agree to something regarding your termination. This is something that is paid after termination and would not have been paid to you if you were still working. 

Post-severance pay is wages for work that are finally paid after leaving employment. Such as unpaid PTO or your last paycheck or an earned bonus or maybe a commission, etc. Items that would be payable if you kept working.

[K-t-F]

Ahh... so my reference actually has nothing to do with the employee terminating and recieving a severance package.  Got it!

[Paul I]

Read the document carefully.  For example, some pre-approved plan documents use the term Statutory Compensation to define 415 compensation with choices for permissible adjustments.  Plan Compensation has its own definition elsewhere in the plan document, and it is Plan Compensation that is used for calculating contributions to the plan.