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The Definition of Compensation
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On January 1, 2007, the Fund adopted a "safe harbor" definition of compensation that the Internal Revenue Service recognizes as non-discriminatory. This definition (used by most pension plans) ensures uniformity for all participants.

Ys have no discretion in determining plan compensation. A Y cannot choose to include amounts that are excluded from the definition. Similarly, a Y cannot disregard amounts that are included in the definition. 

The Definition of Compensation can be summarized as follows:

Amounts included in the Definition of Compensation
The amount that a Y would report in Box 1 of IRS Form W-2 ("wages, tips, other compensation") will be the starting point for determining a Y employee's compensation for plan purposes. Click here for IRS Form W-2 Instructions.

In addition, the following amounts contributed under a salary reduction agreement must be included with the Box 1 amount to determine compensation for plan purposes:

  1. Amounts contributed on a pre-tax basis via a Section 125 cafeteria plan under the Internal Revenue Code. These amounts include any reduction in an employee's compensation to pay for insurance, including medical, dental, group term life insurance, disability insurance, and accidental death and dismemberment insurance, under a Section 125 cafeteria plan. These amounts may also include pre-tax contributions under a Section 125 cafeteria plan, such as a Dependent Care Flexible Spending Account (FSA), a Health Care FSA, or a Health Savings Account (HSA).

  2. Amounts contributed on a pre-tax basis to a Section 403(b) plan such as the Fund's Savings Plan, or to a 401(k) plan or Simplified Employee Pension plan sponsored by a Y.

  3. Amounts contributed on a pre-tax basis to a qualified transportation fringe benefit plan (Section 132(f)(4) plan). These amounts used to pay for commuting and parking expenses.

  4. Amounts contributed on a pre-tax basis to an eligible deferred compensation plan (Section 457(b) plan) sponsored by a Y.

Amounts NOT Included in the Definition of Compensation

  1. Severance paid after termination of employment. Severance is payments made solely due to the termination of employment. It does not include vacation pay or other amounts the employee is entitled to on account of their Y employment.

  2. Any amounts reimbursed by the Y for qualified moving expenses that are reported in Box 12 of IRS Form W-2. See IRS Publication 521 Moving Expenses.

  3. Non-taxable "fringe benefit" amounts, such as food and lodging, provided by a Y.

  4. Compensation in excess of IRS limits. Read more information regarding the compensation limit.

Moving Expenses

If a Y provides an employee with a moving allowance that is includable in Box 1 of IRS Form W-2, it is included as compensation for plan purposes.

Reimbursements for qualified moving expenses reportable in Box 12 of IRS Form W-2 are not included as compensation for plan purposes. See IRS Publication 521 Moving Expenses.