What are the types of post-severance compensation eligible for inclusion in 415 compensation?

The correct answer is based on the guidelines established for what constitutes 415 compensation under Internal Revenue Code Section 415, which pertains to limitations on contributions and benefits in a qualified retirement plan.

In this context, 415 compensation refers to the total amount of compensation that can be considered for determining contributions or benefits in a retirement plan. This includes various forms of income that a participant might receive after their employment has ended.

Regular compensation is the foundational component, as it encompasses the standard salary or wages. Leave cash-outs are also included because they represent monetary payouts for unused vacation or sick time, which are forms of compensation provided as a benefit. Nonqualified deferred compensation falls within this context as well since it pertains to earnings that are deferred until a future date, often past the termination of employment, and can be considered as an addition to total compensation.

Pension distributions, while related to retirement benefits, do not qualify as post-severance compensation since they are payments made from retirement plans itself rather than forms of compensation.

By focusing on the components that encompass various types of post-employment compensation in connection with retirement plans, this understanding aligns with the requirements outlined in Section 415, making the selection of regular compensation, leave cash-outs, and nonqualified deferred