Please help me make sure I am thinking through this right:
- I started a new job toward the end of 2022.
-My base salary is above the HCE amount so I will be an HCE for 2023 year
-Since the income I actually received in 2022 from the company is below HCE threshold, I am not considered HCE yet and the HCE contribution limits do not apply to me in 2023, but they will apply starting in 2024.
Is this correct? If it is, I will be able to max out after-tax contributions for mega-backdoor Roth purposes this year.
Impossible for New hire to be HCE in first year?
Re: Impossible for New hire to be HCE in first year?
It depends on how your company elects to define HCE. There is the IRS limit, then companies have the option of limiting to those who are also in the top 20% of compensation across the company. Your company will notify you if you're categorized as HCE. My employer does an estimate in October for the next calendar year. However, I have heard of companies who don't provide notification until *after* the calendar year and return any excess contributions at that time.