### Question
How is the "highly compensated employee" defined?


### Answer
The term **highly compensated employee** is defined in *26 U.S.C. § 414* as follows -

> any employee who—



(A) was a 5-percent owner at any time during the year or the preceding year, or



(B) for the preceding year—



(i) had compensation from the employer in excess of $80,000, and



(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year

#### Citation:
  - *26 U.S.C. § 414*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter D-Deferred Compensation, Etc. > PART I-PENSION, PROFIT-SHARING, STOCK BONUS PLANS, ETC. > Subpart B-Special Rules**

