HCE - Highly Compensated Employee
Definition
Any employee who --
- Was a 5-percent owner at any time during the year or the preceding year, or
- For the preceding year -- had compensation from the employer in excess of $80,000 ( indexed- see chart below), and
- If the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year.
Year |
2006 |
2005 |
2004 |
2003 |
2002 |
2001 |
2000 |
HCE Threshold |
100,000 |
95,000 |
90,000 |
90,000 |
90,000 |
85,000 |
85,000 |
Year |
2014 |
2013 |
2012 |
2011 |
2010 |
2009 |
2008 |
2007 |
HCE Threshold |
|
|
|
|
|
$110,000 |
$105,000 |
$100,000 |
An employee is in the top-paid group of employees for any year if he/she is in the group consisting of the top 20 percent of the employees when ranked on the basis of compensation paid during the year.
An employee is treated as a 5-percent owner for any year :
- If the employer is a corporation, any person who owns more than 5 percent of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation, or
- If the employer is not a corporation, any person who owns more than 5 percent of the capital or profits interest in the employer.
Referring Cite
IRC § 414(q)(1)
Additional Helpful Information
A qualified plan must perform nondiscrimination testing to ensure contributions or benefits do not discriminate in favor of HCEs
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Key employee
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