Highly Compensated Employee [Internal Revenue] Law and Legal Definition

According to 26 USCS § 414 [Title 26. Internal Revenue Code; 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], highly compensated employee means “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.”