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Highly Compensated Employee Definition


Guest Jhagan
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Guest Jhagan

Is it necessary to include the definition of Highly Compensated Employee in a 401(a) plan for LOCAL GOVERNMENT AGENCY since they are exempt from the provisions that use this definition?

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Guest CVCalhoun

I can't think of any reason this would be required. The only authority under which the definition of highly compensated employee is required is that most retirement plans are subject to the rules of Code §§ 401(a)(4) and 410(B). For those which are not, it is hard to see how the IRS would have any authority to require such a definition.

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Employee benefits legal resource site

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  • 2 months later...

my perspective is that having "extra" definitions in a document is not a bad thing. I see 2 advantages:

1. It helps you because it keeps most of your documents similar.

2. It helps the plan sponsor because it makes modifications easier when the inevitable law changes come along.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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