* The demand for retirement planning solutions for highly-compensated employees will have spurred product development activity (64 percent).
"[But] the retirement readiness movement will present a challenge for highly-compensated employees for whom 401(k) plans and 409(A) non-qualified deferred compensation plans are imperfect solutions.
* It ensures that highly-compensated employees can maximize their pre-tax contributions to the plan; and
And their failure to prepare for retirement can interfere with the retirement planning of the highly-compensated employees, called HCEs and defined as those who own at least 5 percent of the company or earn $115,000 or more in 2012.
* Benefit caps: Group LTD plans typically have benefit caps based on more moderate income levels, which may limit the amount of income replacement more highly-compensated employees can receive.
Offering individual disability insurance allows an employer to either reduce the benefit maximum on group LTD plans with high maximums (risk transfer) or maintain their current maximum and not increase the group LTD benefit maximum (risk mitigation), which reduces the impact on the employer of claims from highly-compensated employees. And that's just one of many benefits of risk transfer and risk mitigation.
A noncontributory split-dollar plan (e.g., an endorsement employer-pay-all plan) for a select group of management or
highly-compensated employees is exempt from these requirements, except for the requirement that plan documents be provided to the Secretary of Labor upon request.
Highly-compensated employees are assumed to receive a large annual allocation, generally the maximum amount permitted under the Section 415 annual additions limit (the lesser of $49,000, as indexed for 2009, or 100% of compensation).
In order to be nondiscriminatory, a dependent care assistance plan (DCAP) may not discriminate in favor of highly-compensated employees (or their dependents) as to eligibility to participate or as to contributions or benefits and must satisfy a concentration test.
DCAPs satisfy the eligibility, contributions, and benefits tests if they do not discriminate in favor of highly-compensated employees or their dependents after excluding employees who have not attained age 21 and completed one year of service and certain union employees.
When discussing disability insurance, particularly as it refers to
highly-compensated employees and professionals, there appears to be a distinct lack of understanding of the mechanics of disability income insurance coverage.
The bill known as the Tax Cut and Jobs Act of 2017 (theAct) in Internal Revenue Code (IRC) Section 4960 imposes a 21 percent excise tax on employers for any remuneration in either or both of two specific situations: amounts in excess of $1 million paid to a covered employee by an applicable tax-exempt organization for a taxable year, and/or any separation or parachute payments made to a
highly-compensated employee (defined by the IRS as greater than $120,000 for 2018) terminating employment that is equal to or greater than three times the average W-2 earnings of that individual for the five years prior to the year oftermination.
