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Author: rgeist Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25278  
Subject: Re: "Real" 401K cap Date: 6/13/2001 5:42 PM
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The intent of the law is to encourage the decision makers at a company (the assumption being that the most highly compensated employees also have the greatest influence) to encourage greater participation among their lower paid subordinates.

What is the law? And why would limiting the amount I can save for retirement motivate me to encourage greater participation among lower paid subordinates?

By tying contribution rates of the highly compensated group to that of the lower compensation group, hopefully management will educate employees and offer generous matching contributions to increase participation (thus allow themselves to contribute more).

How are the contribution rates "tied" between the two groups when one group is limited to a significantly lower rate? And how does my success in educating other employees allow me to contribute more (especially given that the decision makers of any large company are a very small minority at the top of the "highly compensated" group therein)?

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