S.D. Codified Laws § 3-12C-105
For the purposes of this chapter, the term, compensation, means gross wages paid to a member by the employer for credited service rendered during the period for which the payment was earned. Compensation includes any amount reported as wages, tips, and other compensation on the member's federal form W-2 wage and tax statement, except as otherwise excluded in this section; any amount of member contributions made by an employer after June 30, 1984, pursuant to § 3-12C-401; and any amount contributed by a member to a plan that meets the requirements of section 125, 401, 403, 408, or 457 of the Internal Revenue Code.
Compensation does not include any allowance, payment, or reimbursement for travel, meals, lodging, moving, uniforms, or any other expense that is incidental to employment and paid or reimbursed by the employer; any lump sum payment for sick leave; any lump sum payment for annual leave; any payment for, or in lieu of, insurance coverage of any kind or any other employee benefit paid by an employer directly to a member or directly to a third party on behalf of a member or a member and any dependent; any allowance or payment for housing or vehicles; any temporary payment paid as a lump sum or over a period of time that is not due to additional duties; any amount paid in a one-time lump sum payment or over a period of time and based on or attributable to retirement or an agreement to retire in the future or results in an incentive to retire; any payment made upon dismissal or severance; any worker's compensation payment; and any payment contingent on a member terminating employment at a specified time in the future paid or payable in a lump sum or over a period of time.
SDCL 3-12C-105