Who is a Highly Compensated Employee (HCEs)?
HCEs are divided into 2 groups: highly compensated active employees and highly compensated former employees. In certain circumstances, highly compensated active employees and highly compensated former employees are considered separately in applying the provisions for which the definition of HCE is applicable. To determine if an employee is a highly compensated active employee for the determination year, two calculations are required: the look-back year calculation and the determination year calculation. For the look-back year calculation, a highly compensated active employee is an employee who performs services for the employer during the determination year, and who during the look-back year: • Was a 5 percent owner of the employer, or • Received compensation from the employer of more than $110,000 (2009 Limit, subject to COLA) and, if the employer elects, was a member of the top-paid group of employees. For the determination year calculation, an employee is a highly compensated active
