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I would like to make one thing very clear regarding the prior posts: 105(h) does NOT use a 414(q) definition of HCE (unless the IRS guidance on insured health plans does so and provides guidance with respect to self-insured plans as well). Instead, discrimination in favor of highly compensated individuals is prohibited. A highly compensated individual is defined as one of the five highest paid owners, a shareholder who owns more than 10% of the employer's stock; or is included among the highest paid 25% of all employees (other than employees who can be excluded for purposes of the test, such as employees with less than 3 years of service, employees who have not attained age 25, part-time or seasonal employees or collectively bargained employees). This determination, from the Code's actual language does not appear to support a look-back determination. Therefore, do not assume that you will not be a highly compensated individual merely because you are newly hired. I have also seen authority that if the amounts are paid with after-tax amounts that they will not be taken into account for purposes of 105(h) nondiscrimination testing.