That makes sense. This has piqued my interest this morning b/c I don't think I've ever really thought about the numbers. My co-worker, who is an HCE, was looking into the after tax contributions just last week, which is why I thought this may be a way around the audit.
Someone making around $126k, marking them an HCE, has to contribute 15% to get to the $19k limit. That means the average non-HCE contribution must be 12% correct?
Considering every article written about how lousy people are saving the last 10 years, that sounds like a really high average contribution. So how is it that last year was the first time the HCE's I worked with failed the test? I doubt the average contribution went down for non-HCE's. I'm thinking I'm missing some major component here.
It does make sense to me now why they have increased the match from 3% to 3.5% last year, and are increasing it for 4% in January. So the 4% match means most will contribute at least the 8% to get the full match, bringing the average up.