The definition of Compensation under the Plan can vary depending upon the purpose (e.g., allocations, nondiscrimination testing, tax deductions.)
In general, the amount of your earnings from your Employer taken into account under the Plan is all earnings reported to you on Form W-2. Compensation will include amounts that are not included in your taxable income that were deferred under a cafeteria plan, a 401(k) plan, a salary deferral SEP plan, a 403(b) tax-sheltered annuity plan, a 457(b) deferred compensation plan of a state or local government or tax-exempt employer, or transportation fringe benefits that you receive.
The definition of Compensation used under the Plan has been further adjusted to exclude the following amounts.
- Amounts deemed to be compensation that relate to an automatic enrollment cafeteria plan where you fail to provide proof of insurance will be excluded when determining your Compensation.
If you receive payments from your Employer within 2 ½ months after severing your employment, any regular pay for services you performed prior to severance will be included in Compensation. Other post-severance payments will affect your Compensation as described below.
- Unused accrued sick, vacation or other leave that you are entitled to cash out will be excluded from Compensation for purposes of Deferrals, Nondeductible Employee Contributions and Mandatory Employee Contributions.
- Amounts received under a nonqualified unfunded deferred compensation program will be excluded from Compensation.
The measuring period for Compensation will be the Plan Year.
The maximum amount of Compensation that will be taken into account under the Plan is $245,000 (for 2009). This amount increases as the cost of living rises.