Highly Compensated Employee
- Highly Compensated Employee
- For employer-sponsored, tax-advantaged retirement plan purposes, anyone who is a 5% owner of a company or who received more than $110,000 in compensation in 2010 (the compensation limit is adjusted annually). If the employer chooses, a highly compensated employee may also be defined as any employee whose pay is in the top 20% of compensation for that company.
When a company contributes to a defined-benefit or defined-contribution plan for its employees and those contributions are based on the employee's compensation, the Internal Revenue Service wants the company to minimize the discrepancy between the retirement benefits received by highly compensated and lower compensated employees. If the difference is too great, the company can lose the tax deduction it gets for the retirement plan.
Investment dictionary.
Academic.
2012.
Look at other dictionaries:
highly compensated employee — (HCE) USA Any employee who either: • Was a 5% owner of the employer at any time during the year or the preceding year. • Had compensation in excess of $110,000 (in 2010) as indexed, in the preceding year and, if the employer so elects, was in the … Law dictionary
non-highly compensated employee — (NHCE) USA An employee who is not a highly compensated employee. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 … Law dictionary
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Cash balance plan — A cash balance plan is a defined benefit retirement plan that maintains hypothetical individual employee accounts like a defined contribution plan. The hypotheticality of the individual accounts was crucial in the early adoption of such plans… … Wikipedia
General nondiscrimination — The 1986 Tax Reform Act introduced the General Nondiscrimination rules which applied to qualified pension plans and 403(b) plans that for private sector employers. It did not allow such pension plans to discriminate in favor of highly compensated … Wikipedia
NHCE — non highly compensated employee (NHCE) USA An employee who is not a highly compensated employee. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 … Law dictionary
HCE — highly compensated employee (HCE) USA Any employee who either: • Was a 5% owner of the employer at any time during the year or the preceding year. • Had compensation in excess of $110,000 (in 2010) as indexed, in the preceding year and, if the… … Law dictionary
disqualified person — USA In the context of certain employee benefit plans, a person who is one of the following: • A fiduciary. • A person providing services to the plan. • An employer that has any employees covered by the plan. • An employee organization that has… … Law dictionary
