What retirement planning options are available to highly compensated employees?
November 8, 2006
Date: Thu, 05 Oct 2006
If you are classified as a highly-compensated employee, your 401(k) contribution is limited. What other options does a highly-compensated employee have?
Date: Wed, 01 Nov 2006
If the employer is willing to contribute 3% of compensation for all employees, the limitation for highly-compensated employees is eliminated.
The Pension Protection Act of 2006 includes a provision permitting automatic enrollment of employees in a 401(k) plan, with an election available to opt-out of participation, effective for plan years beginning after December 31, 2007.
Another possibility that has become much more complex is to set up a non-qualified deferred compensation plan with your employer. There a many new rules that make setting up such a plan more difficult and increases the risk for employees.
These are not simple, inexpensive solutions. You and your employer should work with qualified legal counsel to explore your alternatives.
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