Simplification of Present-Law Tax Rules Relating to Qualified Pension Plans (S. 1364, the Employee Benefits Simplication And Expansion Act of 1991, And S. 318) : Scheduled for a Hearing Before the Subcommittee On Private Retirement Plans of the Senate Com

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Such a rule recognizes that compensation patterns will be affected by such factors as geograph- ic location, employer size, and industry. However, such a definition can be unjustifiably complex to apply in the case of large employ- ers with numerous operating divisions or lines of business.
The bill adopts a definition of highly compensated employee that utilizes a dollar compensation threshold and an ownership interest threshold to identify highly compensated employees. Under this definition,
...the level of the compensation threshold becomes the key issue — if the compensation threshold is set either too low or too high, it may permit an employer to discriminate against rank-and- file employees. However, no single compensation threshold will be appropriate for every employer. Thus, a definition of highly com- pensated employee that establishes a single compensation thresh- old may sacrifice theoretically accurate results in favor of a more administrable rule that achieves a rough justice in most cases.

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