re: Can someone explain the highly compensated employee 401k rule

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I've never had a problem with this personally, but I audit 401(k) plans so I'm pretty exposed to it. Like someone else mentioned, I don't like that one person's retirement can be affected by another person's decision.

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This is an absurd statement. Any company can offer Safe Harbor plans etc that can mitigate the risk of failing discrimination tests. The required contributions by the employer would amount to either 3% of salary mandatory or for participation method, 100% of up to 3% of salary + 50% from anything above 3% up to 5%

Truth is, employers use low income employees as scape goats and have no problem with not having 100% participation as it saves them money. That or the more embarrassing option which is that they are not informed about Safe Harbour as it is an easy way to guarantee near 100% participation

It is crazy to think that there is a retirement program in which people making identical financial contributions into the same company sponsored retirement plan can result in one person seeing tax savings in excess of the other person of $180,000 over 30 years