With the IRS’s release of the 2017 401(k) contribution limits and the annual compensation cap for calculating deferral and matching contributions, plan sponsors may want to revisit how their plan documents’ define “compensation”—and how that definition (or definitions) affects employee participation and savings rates.
Sponsors of 401(k) plans have some leeway in selecting which kinds of employee compensation to use for determining employee-deferral and employer-matching contributions, said Martha M. Sadler, executive vice president at Newport Group, a retirement plan and executive benefits consultancy in New Bern, N.C.
