414(s) Compensation

In the Internal Revenue Code, the Section 41 4(s) defines the compensation used for nondiscrimination testing to make sure that the plan does not provide contributions that discriminate in favor of Highly Compensated Employees (HCEs). A plan is not required to use a 41 4(s) safe harbor definition of compensation to allocate ESOP contributions. However, if the plan does not use clause, it will be subject to additional discrimination testing.

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