“Compensation” means the total amount paid to an employee for a plan year as required to be reported on the employee’s Internal Revenue Service form W-2 for income tax withholding purposes. This amount shall include employee contributions picked up by the employer under Section 414(h)(2) of Title 26 of the United States Code; and any amounts deducted by the employer from the participant’s salary, including deductions for tax-deferred retirement plans or insurance programs; deductions for participation in an eligible deferred compensation plan within the meaning of Section 457 of Title 26 of the United States Code; and deductions for participation in a plan that meets the requirements of Section 125 or 401(k) of Title 26 of the United States Code.
Source:
Section 22960.13, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV§ionNum=22960.13..