Employer has 401(k) plan that is fiscal year ending 8/31/03. Therefore the lookback year for HCE purposes is the year ending 8/31/02. In determining HCE's would we use the dollar amount for 2001 ($85,000) and determine who had compensation over that amount during the lookback year to determine who is an HCE for the current year or would we use the amount for 2002 ($90,000)?

Thanks.

it is the year in which the lookback year begins.
In your case the lookback year is 9/1/01-8/30/02
since this begins in 01 use 85,000.