AAR2602. Definition of Compensation

Compensation is a critical component of qualified retirement plan administration, affecting contributions, nondiscrimination testing, and numerous other plan calculations. This session will examine commonly used definitions of compensation, how plan-specific definitions and exclusions are applied, and the operational challenges that can arise when plan provisions and payroll practices do not align. Through practical examples, attendees will learn how to recognize compensation-related risks and strengthen processes for administering the plan in accordance with its terms.

Learning Objectives:

• Distinguish among common definitions of compensation used in qualified retirement plans and understand when those definitions may differ.
• Recognize how compensation definitions and exclusions can affect plan contributions, testing, and administration.
• Identify common compensation-related operational risks and practices that can help prevent plan errors.