compensation
(5) Other definitions and special rules For purposes of this subsection— (A) Integration level (i) In general The term “integration level” means the amount of compensation specified under the plan (by dollar amount or formula) at or below which the rate at which contributions or benefits are provided (expressed as a percentage) is less than such rate above such amount. (ii) Limitation The integration level for any year may not exceed the contribution and benefit base in effect under section 230 of the Social Security Act for such year. (iii) Level to apply to all participants A plan’s integration level shall apply with respect to all participants in the plan. (iv) Multiple integration levels Under rules prescribed by the Secretary, a defined benefit plan may specify multiple integration levels. (B) Compensation The term “compensation” has the meaning given such term by section 414(s). (C) Average annual compensation The term “average annual compensation” means the participant’s highest average annual compensation for— (i) any period of at least 3 consecutive years, or (ii) if shorter, the participant’s full period of service. (D) Final average compensation (i) In general The term “final average compensation” means the participant’s average annual compensation for— (I) the 3-consecutive year period ending with the current year, or (II) if shorter, the participant’s full period of service. (ii) Limitation A participant’s final average compensation shall be determined by not taking into account in any year compensation in excess of the contribution and benefit base in effect under section 230 of the Social Security Act for such year. (E) Covered compensation (i) In general The term “covered compensation” means, with respect to an employee, the average of the contribution and benefit bases in effect under section 230 of the Social Security Act for each year in the 35-year period ending with the year in which the employee attains the social security retirement age. (ii) Computation for any year For purposes of clause (i), the determination for any year preceding the year in which the employee attains the social security retirement age shall be made by assuming that there is no increase in the bases described in clause (i) after the determination year and before the employee attains the social security retirement age. (iii) Social security retirement age For purposes of this subparagraph, the term “social security retirement age” has the meaning given such term by section 415(b)(8). (F) Regulations The Secretary shall prescribe such regulations as are necessary or appropriate to carry out the purposes of this subsection, including— (i) in the case of a defined benefit plan which provides for unreduced benefits commencing before the social security retirement age (as defined in section 415(b)(8)), rules providing for the reduction of the maximum excess allowance and the maximum offset allowance, and (ii) in the case of an employee covered by 2 or more plans of the employer which fail to meet the requirements of subsection (a)(4) (without regard to this subsection), rules preventing the multiple use of the disparity permitted under this subsection with respect to any employee. For purposes of clause (i), unreduced benefits shall not include benefits for disability (within the meaning of section 223(d) of the Social Security Act).