UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next
Author: cfofool Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75537  
Subject: Re: 401(k) and Highly Compensated Employees Date: 8/2/1999 12:12 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement