Comments on: What is a Highly Compensated Employee?

By: Anonymous

Anonymous — Thu, 26 Jan 2012 19:52:46 +0000

This is Crap!!!

By: Todd Bonham

Todd Bonham — Sun, 22 Jan 2012 02:29:09 +0000

I am an employee of a small company, about 25 employees, noone makes over 110K. How would you determine HCEs in this case?

By: Monica E.

Monica E. — Mon, 26 Dec 2011 21:44:08 +0000

I was awarded a 30K bonus last year for representing my company in court. This threw me over the 110K limit. This year I am making way less yet I am limited to a 6% contribution which is only about 5K for the year. I am way under the 16500 allowed. What other options do I have to shelter my money?

By: Stanley Smith

Stanley Smith — Sat, 09 Jul 2011 04:04:19 +0000

In my W-2 for 2010 Box 1 is less than
$ 110,000, but Box 3 and Box 6 is $ 123,000.
Of the $123,000 (Socail Security & Medicare wages) $ 24,000 did not undergo treatment for Retirement benefits. That means $ 24000 is not the subjected to Retirement benefits.
Only $ 99,000 is the suject matter for Retirement benefits.
Do I fall within the 2010 limit for
Highly Compensated Employee? In my organization all employees are welcome to participate in the 403 (b) retirement plan.
Does the organization need to undego test?

By: Anonymous

Anonymous — Sat, 02 Jul 2011 07:11:15 +0000

In my W-2 for 2010 Box 1 is less than
$ 110,000, but Box 3 and Box 6 is more than
$ 110,000. Am I fall within the 2010 limit for
Highly Compensated Employee? In my organization all employees are welcome to participate in the 403 (b) retirement plan.
Does the organization need to undego test?

By: JR

JR — Thu, 09 Jun 2011 20:14:05 +0000

Is a HCE eligible for participation in an FSA if the employer does not contribute to the FSA. In other words if the FSA is 100% funded by payroll deductions, how could there be an unfair advantage over other employees?

By: Vincent Granville

Vincent Granville — Sat, 30 Apr 2011 00:40:50 +0000

What about people having two jobs, none of them qualifying as HCE, but when combined together, qualifying as HCE. Or what about self-employed or CEOs with no salary / not on payroll, but making big enough income to qualify?

By: Carol

Carol — Sat, 23 Apr 2011 17:25:44 +0000

Soooo, this has happened twice to my husband, I think mostly because not a whole lot of people are contributing to the 401k @ his company. He is over 50 & we do max contributions so we can retire. It’s very frustration toget that stupid check because both times it was about $10,000. Yipes, that’s a terrible tax bill! We never are told untiol right around tax day. Is there a way we can know or figure out during the year where we stand? Is there a formula? His peoplethat supervise

By: KMB

KMB — Wed, 13 Apr 2011 14:52:43 +0000

I’m getting nailed by this for 2009. I received a letter and a disbursement check, which apparently means I’ll need to cough up several thousand dollars in 2011 in additional income taxes, as opposed to saving that money for retirement. The company I work for, a very large IT contracting company, has no matching contribution. I am in my 50s and was finally in a position to start plowing some money into retirement, but apparently what I do with _my_ money is restricted by what thousands of nameless fellow employees fail to do with _theirs_. How does this law in its current form do anything about “top heavy” compensation plans? Since there is no matching contribution, its not like they’re deliberately rewarding top management at the expense of low-level employees. All this law does is shift the burden to an insolvent social security system.

By: Jules

Jules — Wed, 23 Mar 2011 18:20:56 +0000

Brenda – Really, 2200? This is something you need to ask your HR department or your 401k administrator. Doesn’t sound right to me, I’ve never given a non-HC employee money due to discrimination testing.

By: brenda

brenda — Tue, 15 Mar 2011 22:58:12 +0000

what happens if I am a “highly” compensated employee and my company does NOT contribute to my 401K? are theses “rules” still in effect? I contribute 3800 last year to my 401K They are sending me back a check for $2200.00 WHY??????

By: trey

trey — Tue, 08 Mar 2011 19:16:28 +0000

I’m in the union and the pension plan we participate in says “because my dad is primary share holder of one of the electrical contractors i cant contribute more than 4% to my 401K” regardless of what contractor i work for. I dont think this is right!!!

By: adeyemi sobowale

adeyemi sobowale — Wed, 26 Jan 2011 19:13:08 +0000

It is sad that you are discriminated against for being highly compensated. It is OK for non-highly compensated to contribute $16,500 while highly compensated cannot do so because of unfair law. The government workers are not discriminated against getting their pension reduced because of high compensation.

By: Bob

Bob — Wed, 12 Jan 2011 17:50:48 +0000

Ok, so 2009 Box-3 wages states 106800, which takes out pretax contributions, but not 401K. It also includes bonus’s, so it would apear I am not an HCE. 2010 W2 has not come out yet but should be around 100000 so again I should be ok and can take advantage of the catch up contributions this year. Thanks.

By: Zoey

Zoey — Wed, 12 Jan 2011 03:51:58 +0000

Well, the compensation used to determine whether you are a HCE (highly compensated employee) may not be the same compensation the plan uses for contribution purposes. There are several different types of compensation allowed in a plan. For instance, a plan may exclude bonuses, overtime, commissions, etc.

Unfortunately, there will probably be no letter stating that you are a HCE. Some employees don’t find out until they have to take money back (i.e., refund). Look at your W-2 from last year.

There is much controversy over auto-enroll. Personally I think it ticks off employees. The fact that they are thrown into the plan and then have to go through the hassle to “opt out” if they never wanted in, in the first place. However, employers do it because it helps the testing. And failing the ADP and/or ACP test(s) is what causes the HCE’s to have to take some of their contributions back.