What constitutes a “Highly Compensated Employee” or HCE for purposes of pension plans and contributions?
In determining an employee’s HCE status for any given year, the HCE limit for the previous year is the figure that is actually used. Thus, when determining which employees are HCEs for the year 2005, qualified plans must compare 2005 compensation against the $95,000 limit which is in effect for 2005, with the $90,000 limit for 2004. There are other factors to consider with HCEs, so please consult us for more information or advice.
