A Highly-Compensated Employee (HCE) is someone at a company who earns a high salary or owns a significant part of the business. The IRS uses this term when testing workplace retirement plans to make sure benefits are fair for all employees—not just those at the top. If too much of a company’s retirement plan contributions or benefits go to HCEs, it could trigger extra testing and require adjustments. Solo 401k plans are not affected by these rules as long as they only cover the business owner and their spouse.