Betterment is not a tax advisor. The information provided in our Support Center is educational and should not be considered tax advice. Please consult a tax professional.
Statutory Compensation is gross compensation or 415 Compensation (defined by the plan document). This is typically wages and all payments of compensation that are documented in a written statement such as a W-2. Please remember that deferred compensation like 401(k) and section 125 plans should be included in the gross compensation reported on the census file.
Plan compensation refers to compensation eligible for 401(k) benefits, which may be the same as Statutory Compensation if your plan does not have exclusions such as reimbursement for moving expenses or transit.
The example below demonstrates one hypothetical difference between the two types of compensation:
Employee hired April 1, 2017
Employees can enter the 401(k) plan semi-annually on January 1 and July 1
Plan excludes compensation earned prior to entry into 401(k) plan
Plan Compensation = compensation earned between 07/01/2017 - 12/31/2017
Statutory Compensation = compensation earned between 04/01/2017 - 12/31/2017