HCE Definition

An acronym for Highly Compensated Employee, who meets one of the following conditions:

• Owned more than 5% of the employer business at any time during the year or preceding year
• Received compensation from the business of more than $135,000 (2022) in the preceding year
• In the top 20% of employees when ranked by compensation (if elected by the employer)

NHCE Definition

An acronym for Non-Highly Compensated Employee, who meets one of the following conditions:

• Owned 5% or less of the employer’s business at any time during the year or preceding year
• Received compensation from the business of less than $135,000 (2022) in the preceding year
• Not in the top 20% of employees when ranked by compensation (if elected by the employer)