Highly compensated employees

Highly Compensated Employee

An employee who owns 5% or more of the company for which he/she works or who makes more income than a certain amount set by the IRS. For tax purposes, highly compensated employees contribute less in tax deductible earnings to a qualifying retirement plan. This is because IRAs and other retirement plans do not qualify for tax advantages if their structures seem to favor highly compensated employees more than other employees.

Highly compensated employees.

Highly compensated employees are people whose on-the-job earnings are higher than the level the government has established to differentiate this category of worker.

In 2007, that amount is $100,000. It is increased from time to time to reflect the impact of inflation.

The major consequence of being a member of this group is that the percentage of earnings that highly compensated employees may contribute to their 401(k) or similar plan is determined by the contribution rates of other plan participants who earn less.

If lower-paid employees contribute an average of 2% or less, higher-paid employees may contribute up to twice that percentage.

If the average is 3% to 8%, higher-paid employees may contribute two percentage points more than the average. And if the average is 8% or higher, the maximum for highly compensated employees is 1.25 times that average.

References in periodicals archive ?
A top-hat plan is a nonqualified deferred compensation plan that lets highly compensated employees defer taxes on pay and any employer-matching funds.
This can mean larger retirement funding for highly compensated employees.
Note: For this exclusion to apply, the nondiscrimination roles as to highly compensated employees must be satisfied.
Loans between a retirement plan and a disqualified person may be allowed if they are available to all participants and beneficiaries on a reasonably equivalent basis, are not made to highly compensated employees for amounts greater than those made to other individuals, are made according to specific plan provisions, bear reasonable interest rates and are adequately secured.
During the last year we offered a similar program known as the Cash to Option Program to other highly compensated employees.
Sufficient income protection for highly compensated employees facing indefinite disability is sorely lacking.
The following mandates are applicable only to those plans not grandfathered: nondiscrimination rules that prevent disproportionate benefits from being provided to highly compensated employees over non-highly compensated employees; implementing an external review process in addition to the internal review process; participant discretion in selecting physicians, pediatricians and obstetricians/gynecologists; and preventive care must be provided entirely at the employers' expense.
Highly compensated employees are those employees who were paid more than $105,000 in the past year or own more than a 5 percent interest in the employer.
He has achieved successful results for his clients, whether defending a single plaintiff discrimination claim before a state administrative agency or in a complicated, multi-plaintiff litigation involving a group of highly compensated employees.
and MassMutual Financial, believe it has much potential as a benefit for highly compensated employees.
If your life insurance discriminates in favor of highly compensated employees according to Section 79 (for example, you offer three times salary as a benefit for your highly compensated employees and one times earnings for all other employees), you must impute income for the full value of the life insurance benefit for your highly compensated employees.
Loans cannot be made available on a basis that discriminates in favor of highly compensated employees.

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