### Question
How is the term final average compensation defined?


### Answer
The term **final average compensation** is defined in *26 U.S.C. § 401* as the following:

> 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

#### Citation:
  - *26 U.S.C. § 401*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter D-Deferred Compensation, Etc. > PART I-PENSION, PROFIT-SHARING, STOCK BONUS PLANS, ETC. > Subpart A-General Rule**

