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I have a problem that many people would like to have I suppose. My wife has just found out that she fits into the "Highly Compensated" category as defined by the Internal Revenue Code. So what's the problem? The end result is that she may have to forfit back to her employer some of the money that has gone to her 401k this year. Obviously I don't like the sounds of this. I don't see why she should be penalized, in the form of not being allowed to contribute the same amount to her 401k as other employees, just because she makes more money to begin with. What is the logic behind this law? Can anyone provide more details, like is it only company matches that will be forfitted? It is not possible that her own contributions have to be forfitted is it? Is there a set salary at which this happens or is it some sort of comparison to the rest of the employees that define her as being highly compensated? Will it be this way every year(all other things being the same)? Anyone else out there in this same situation? Have you reduced your 401k contributions and increased other places to compensate?

Thank you.

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