Understanding Key Employee Tests

Governmental regulations prohibit HCE from taking unfair advantage of 401(k) contributions. To determine which employees are highly-compensated, you must first set up the criteria that the system uses to differentiate between HCE and NHCE.

You might need to run multiple tests to determine which employees are highly-compensated. Versions of the most common tests are included in the JD Edwards EnterpriseOne demonstration data so that they are already set up for you. This table describes sample test versions:

Test	Description
Top 20 percent - Look Back Year	This test identifies the top 20 percent compensated employees in an organization during the previous year.
HCE - Look Back Year	This test identifies last year's highest-paid employees who met or exceeded the government-defined compensation amount.
Top 20 percent - Determination Year	This test identifies the top 20 percent compensated employees in an organization for the current year.
Top 100 - Determination Year	This test identifies this year's 100 highest-paid employees.
Top 10 - Determination Year	This test identifies this year's 10 highest-paid employees.
HCE - Determination Year	This test identifies this year's highest-paid employees who meet or exceed the government-defined compensation amount.
ADP/ACP Test Calculations	This test accumulates the results of all previous tests for the current year to determine the final HCEs.

In defining a key employee test, you set the selection criteria for the Employee Master Information table (F060116) and Employee Transaction History Summary table (F06146). By defining a key employee test, you specify the criteria that identify HCEs.