NHCE Clause Samples

The NHCE (Non-Highly Compensated Employee) clause defines which employees are considered non-highly compensated for the purposes of benefit plans, such as retirement or health plans. Typically, this clause sets out the criteria—often based on salary thresholds or job roles—that distinguish NHCEs from highly compensated employees (HCEs). For example, employees earning below a certain annual compensation or without ownership interest in the company may be classified as NHCEs. The core function of this clause is to ensure compliance with nondiscrimination rules in benefit plans, helping to prevent favoring higher-paid employees and maintaining the plan's tax-qualified status.