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Compensation Used to Calculate Retirement Contributions

Employers are responsible for calculating the contributions. There is no invoice. Employers may also wish to review tax considerations.

It is important to understand what is included in Compensation utilized for calculating Retirement Contributions. The Plan document, together with the Participating Employer's Participation Agreement, describe what is included.

For ministers, including highly compensated ministers, the housing allowance is included in the compensation base.

"Compensation” generally means all compensation received as an employee of an Employer to the extent includible in gross income, plus any Elective Deferrals and Catch-Up Contributions the employee makes under the Plan.

Employers have documented on their Participation Agreement any of the following which the Employer elected to exclude from Compensation for the purposes of making contribution calculations:

  • certain amounts paid to ministers in lieu of FICA,
  • insurance premiums paid by the Employer that are imputed to taxable income,
  • and amounts paid by the Employer to offset Federal or state income taxes that the employee owes on benefits the Employer provides for the domestic partner or same-sex spouse of the employee.

Participants: talk to your Employer to understand the amounts included in Compensation. Your Employer will use your Compensation when calculating Retirement Contributions.