What is pre-entry compensation?
Pre-entry compensation is compensation earned from the date an employee was hired or from the beginning of the plan year (whichever is later) through the date the employee is eligible to join the plan. For example, the ABC Retirement Plan runs on a calendar-year schedule. The pre-entry compensation for an employee eligible to enter the plan on July 1 would be the amount earned from January 1 through June 30. This compensation should not include any amounts that are defined in your plan document as excluded, such as bonuses, commissions or overtime. Please review the following examples for further clarification: A plan has a December 31 plan year-end with entry dates of January 1 and July 1. Edith is eligible to enter the plan on July 1. For the period from January 1 through June 30 she made $45,000. For the period from July 1, 2006, through December 31 she earned $55,000, for a total of $100,000 for the plan year. The census should be completed as listed below: Column I = 45,000 Column
