For Cafeteria Plans:
A “highly compensated employee (HCE)” is:
- An officer; or
- A shareholder who owns more than 5%; or
- An individual with annual compensation in excess of the following: ($120,000 for years 2015, 2016, 2017; $115,000 for years 2012, 2013, 2014; $110,000 for years 2009, 2010; $105,000 for year 2008; $100,000 for year 2007; or
- Spouses or dependents of individuals in the first three categories above
A “key employee” is someone who, during the preceding year:
- Was an officer with an annual compensation in excess of the dollar limit for that year ($175,000 for year 2017; $170,000 for years 2014, 2015, and 2016; $165,000 for years 2012 and 2013; $160,000 for years 2009, 2010; $150,000 for year 2008; $145,000 for year 2007)
- Owned more than 5% of the business
- Owned more than 1% of the business and had an annual compensation greater than $150,000
For FSAs and HRAs:
An HCE is:
- One of the 5 highest paid officers; or
- A shareholder owning more than 10%; or
- Someone who is among the highest paid 25% of ALL employees; or
- Spouses or dependents of individuals in the first three categories abo
For DCAs:
An HCE is:
- A shareholder owning more than 5% during the past or current year; or
- An individual with compensation during the past or current year exceeding: $120,000 for years 2015, 2016, 2017; $115,000 for years 2012, 2013, 2014; $110,000 for years 2009, 2010; $105,000 for year 2008; $100,000 for year 2007: if they were not an employee during the preceding year, we would use their anticipated salary for the current year; OR
- Spouses or dependents of individuals in the first three categories
This information may be found in IRS Publication 15-B.
