Key Vs Hce - AutomatedPensions.com
Key Vs Hce
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Updated: 9/Feb/06 21:34:35
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Comparison of Key and Highly Compensated Employees

For most small (micro) closely-held companies, the Key Employees and Highly Compensated Employees (HCEs) are the same, because both definitions boil down to who is/are the owner(s) of the company (in particular, the 5 Percent Owners). However, this is not always the case. It is possible to be Key but not HCE, or to be an HCE but not Key.

Here is a summary of the two definitions:

Description of Employee Key HCE
o
w
n
e
r
  owns more than 5% this year Y Y
owned more than 5% last year - Y
p
a
y
owns more than 1% and makes more than $150,000 Y -
  an officer who makes more than $140,000 (indexed) Y -
made more than $95,000 last year (indexed) * - Y*

* Note that if the number of HCEs is limited to the top-paid 20% of the work force, some employees over this pay level may not be counted as HCEs.


Key Employee
Highly Compensated Employee
Glossary