No. of Recommendations: 0
Without belaboring the details there are really two issues here:

1. Who is a highly compensated employee? Generally, anyone who is in the top 20% of all paid employees, or earns over $80,000 ish, or is an officer of the corp. or owns more than 5% of the corp. These rules & definitions are set in the Internal Revenue Code. Your employer can do nothing about them.

2. Every 401(k) plan (except those safe-harbored) must perform the annual ADP (actual deferral percentage) test that compares the contribution percentages of HCE's against the contribution percentages of non-HCE's --- kind of a complicated tetter-totter test. If the plan fails the test and it is not corrected, the plan gets disqualified. The corrective measures (when the test is failed) is to reduce the percetage of contribution (and thus dollars) allowable for the HCE's until things come back into balance.

Regarding your situation, there is little that either you or your employer can do. Sorry.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.