W-2 Compensation Clause Samples
The W-2 Compensation clause defines how an employee’s earnings are calculated and reported for tax and payroll purposes, specifically referencing the compensation reported on IRS Form W-2. This clause typically outlines which types of income—such as base salary, bonuses, and commissions—are included in the W-2 total, and may clarify whether certain benefits or allowances are counted. Its core function is to ensure clarity and consistency in determining compensation for contractual obligations, such as bonuses, severance, or benefits calculations, thereby reducing disputes over what constitutes eligible earnings.
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W-2 Compensation. W-2 Compensation" as used in this Agreement means the Employee's "Gross Pay" (or any analogous term having the same or a similar meaning as "Gross Pay" hereafter used) as reported or reportable on his W-2 statement for the period or periods in question. When referring to a current tax year, "W-2 Compensation" refers to the annualized total computed to the end of such current year of all items includable in "Gross Pay" at their current level or levels unless the context clearly indicates otherwise.
W-2 Compensation. Compensation as reported on Form W-2 and as more fully defined in Section 2.09(a)(i) of the Plan. The above definition of Compensation shall apply for the purposes of allocating or determining: [ ] Salary Reduction Contributions [ ] Deferred Cash Contributions [ ] Employer Profit Sharing Contributions [ ] Employer Matching Contributions [ ] Non-discrimination tests contained in Article VI of the Plan. [ ] Section 415 Limitations on Allocations
W-2 Compensation. If the Employer elects to have the W-2 compensation ---------------- definition apply, Testing Compensation shall mean the Employee's Earned Income and wages within the meaning of Code (S) 3401(a) and all other payments of remuneration to the Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Code (S)(S) 6041(d), 6051(a)(3) and 6052, determined without regard to any rules under Code (S) 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed. Testing Compensation shall not include amounts which exceed $200,000 (or such larger indexed amount determined by the Commissioner of Internal Revenue in accordance with Code (S) 401(a)(17)). The Employer shall specify in its Adoption Agreement whether Testing Compensation shall include Employer contributions which are not includable in the gross income of the Employee under Code (S)(S) 125, 402(a)(8), 402(h), or 403(b). The Employer's election pursuant to the immediately preceding sentence shall apply to Testing Compensation for purposes of Code (S)(S) 401(m), 401(k), 401(a)(4), and 401(l). For purposes of the Key Employee determination and the Highly Compensated Employee determination, the Plan Administrator shall apply the Testing Compensation definition by including Employer contributions which are not includable in the gross income of the Employee under Code (S)(S) 125, 402(a)(8), 402(h), or 403(b) and by disregarding the Code (S) 401(a)(17) limitation. For purposes of the Code (S) 415 limitations of Sections 4.10 and 4.11, the Plan Administrator shall apply the Testing Compensation definition by excluding Employer contributions which are not includable in the gross income of the Employee under Code (S)(S) 125, 402(a)(8), 402(h), or 403(b). If the Plan is a profit sharing plan with a Cash or Deferred Arrangement, Testing Compensation shall also have the meaning assigned to it by Section 4.14(n). In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual Testing Compensation of each Employee taken into account under the Plan shall not exceed the OBRA '93 Annual Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as adjusted by the Commissioner for increases in the cost of l...