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The calculation only applies to your firm.

The logic is that they are trying to make sure the "benefits" of the tax deferral are not going mainly to the HCEs. There are also "top-heavy" rules regarding this.

One step employers often take who are in danger of limiting contributions for HCEs is to add a matching feature (or improve the one they have). This often brings new money into the plan. I believe there is a new "safe harbour" in the regs whereby if you offer a generous enough match (I think 3% of pay for all ees whether they contribute or not) you don't have to subject your plan to this test.

Hope this helps,

Kevin
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