IRC Sec. 404(a)(12)

Pension reform legislation added this subsection under IRC Sec. 404(a). It defines compensation used for calculating the maximum deductible contribution to a qualified retirement plan, including a 401(k) plan. Notice that the definition includes employee salary deferrals.

IRC Sec. 404(a)(12) - Added by Pension Reform

''(12) DEFINITION OF COMPENSATION.-For purposes of paragraphs (3), (7), (8), and (9), the term 'compensation' shall include amounts treated as 'participant's compensation' under subparagraph (C) or (D) of section 415(c)(3).''

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