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re: Can someone explain the highly compensated employee 401k rule
Posted on 6/29/15 at 11:02 pm to jmh5724
Posted on 6/29/15 at 11:02 pm to jmh5724
quote:LINK
The test is as follows: the average contributions of highly compensated employees, as a group, cannot exceed the average contributions of nonhighly compensated employees, as a group, by more than about 2 percent. (Age-50 catch-up contributions are not included in discrimination testing.)
It's supposed a way to make sure companies aren't offering 401ks to only the top earners. However, if the low earners aren't taking advantage of the 401k, then the HCE's get screwed.
1
Posted on 6/29/15 at 11:05 pm to jturn17
quote:
It's supposed a way to make sure companies aren't offering 401ks to only the top earners. However, if the low earners aren't taking advantage of the 401k, then the HCE's get screwed.
This. I see the point but every year I take it up the arse due to this rule.
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