What must happen for nonqualified deferred compensation to be included in 415 compensation?

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For nonqualified deferred compensation to be included in 415 compensation, it is necessary that it must be payable for reasons other than termination. This condition ensures that the nonqualified deferred compensation is considered as part of the employee's overall compensation for the purpose of compliance with Section 415 limits, which govern the maximum annual contributions to retirement plans. If the compensation is only tied to termination, it does not accurately reflect the full compensation during the employment period, making it ineligible for inclusion in 415 compensation.

In this context, the rationale behind the other options is important. While receiving compensation within a set period after termination might be relevant in some discussions of payouts, it does not pertain to the inclusion criteria for 415 compensation. Similarly, being included in W-2 wages is not a requirement for nonqualified deferred compensation to be classified under 415. Additionally, the annual salary review process may influence compensation dynamics but does not directly determine its eligibility for 415 calculations. Hence, understanding the specific reasons tied to payment eligibility is crucial in navigating these regulatory requirements.