Company A purchases Company B in early 2006. Company B becomes a wholly owned subsidiary of Company A. It is a stock sale. Company B adopts Company A plan and employees are given credit for prior service and allowed to participate in the Company A plan right away.
Are the employees of Company B who earned more than $95,000 in 2005 HCE's in Company A's plan for 2006? If so, can they be placed in the "otherwise excludable" group?
Sal's Book (2005 edition) addresses this issue with a caveat that future guidance could change his "reasonable" interpretation. I don't have the 2006 edition and the 2007 will not be available until March.