Within a 401k plan, there is a term called Highly Compensated Employee (HCE).
It looks like anyone is considered an HCE if they make $120k+ (in 2016) and/or has 5% company ownership.
I have had a hard time finding concrete and comprehensive definitions on what this is, resulting in a few questions.
- Is $120k total compensation? Salary + bonus? Cash compensation?
- Do things like stock options count towards the compensation process?
- Is there a limit to the number of employees which must be considered HCE?
- Imagine a company with 100 employees, where 99 of them make $120k+. Are those all considered HCE? Are they limited based on the 1 person who isn't an HCE?
- Is this defined somewhere concisely by the IRS?