401(k)ology: Highly Compensated Employees

Summary

The determination of who is considered a Highly Compensated Employee ("HCE") is one of the most important factors in maintaining 401(k) plan compliance. The nondiscrimination tests applicable to 401(k) plans rely on a correct HCE determination. Mistakes made in HCE status can have adverse consequences and may jeopardize the tax qualified status of the plan.