Talk to any prospective new employee and one of the first considerations on their mind is how much will they be compensated for their employment services. Compensation comes in various forms: wages, bonuses and commissions, overtime, and various other soft forms of compensation. For retirement planning purposes, what comprises “compensation” is very important for discrimination testing purposes.
What would you think if I tell you that there are ways to legally skew benefits in favor of either those who are considered highly compensated employees (HCEs) or those who are older employees? Nuts ... not entirely. You will learn about these options and more in this chapter.