Question about Highly Compensated Employees and 401(k) Contributions

April 12, 2009 7:21 PM

Am I a Highly Compensated Employee (HCE) with regards to making 401(k) contributions?

Here's what I know:

* A Highly Compensated Employee (HCE) is limited in his or her contributions to a 401(k) program.

* According to this page, (and others) if I made over $105,000 in 2008, I would be considered an HCE in 2009.

* My company will automatically limit the contributions I can make if I earn more than the HCE limit from them.

Here's my situation:

Last year I switched jobs from Company A to Company B in February. At Company A I was earning about $80,000 a year, at Company B I make $110,000 a year (Go me!). Company B would automatically declare me an HCE if I earned over $105,000 from Company B last year. Because I switched mid-year, I earned about $100,000 from Company B last year. However, I received about $20,000 from Company A last year (including bonus and unpaid vacation time). So, my total income last year was $120,000.

My question then is whether I am an HCE based on my total annual salary from last year (across both employers) or am I not an HCE because my salary from my current employer is less than the limit?

Throwaway email account: [e-mail]

[Asking as Anonymous to avoid awkwardness with my MeFi coworkers]

posted by anonymous to Work & Money (1 answer total)

highly technical issue. your company should be using their consultants to determine status of all ees, firmwide, not just you. then they pass on to all ees the information on what each ee can contribute. not your job to determine this.
posted by JimN2TAW at 9:19 PM on April 12, 2009