Compensation Used for Safe Harbor Match

[metsfan026]

Generally we use W2 Compensation (Box 5 of the W2) as the definition for Compensation in our Plans.  We have a client that wants to use Gross Compensation though for the Safe Harbor Match.

I just wanted to make sure it was allowed, so we knew how to proceed.

Thanks in advance!

[justanotheradmin]

well box 5 is specifically Medicare Wages and Tips, which may or may not be the same as the plan document's definition as W-2 Compensation. 

You should double check the basic plan document for the actual definition of W-2 compensation, which might be different. 

For many documents W-2 comp really means anything that could be reported on a W-2, so its more often box 1, plus pre-tax amounts in Box 12, plus pre-tax amounts not reported on the W-2(such as §125 deferrals). 

I'm not sure what you mean by Gross Compensation either. 

[Jakyasar]

The so called gross compensation, which can be different than W-2, may be on the actual payroll records.

Also, the plan document must provide how the compensation is to be determined. There are automatic exclusions and inclusions, depending on what option is checked on the plan document.

[jsample]

And that is why there is always a session on Compensation at every conference.  Even though is has remained basically unchanged in the regulations, it is still one of the most confusing aspects in the plan document and for administrators.