The IRS defines a highly compensated employee as someone who meets either of the two following criteria-
- An employee is an HCE if he or she is an employee during the initial plan year (determination year) and is a 5% owner at any time during the plan year or the 12-month period immediately preceding the plan year (lookback year)
- A worker who received $135,000 or more in compensation from the employer that sponsors his or her plan in 2022. For 2023, this threshold rises to $150,000.