Okay. First time I've run into this situation. Have a plan with top paid group election. 20% calculation comes to 4 HCEs.

Have the following comps:
200K
170K
155K
150K
150K
150K
150K

My question: The 150k is the 4th "position," but how do I choose which $150k gets chosen? Or do I take them all?

All.

That's what I thought. But I didn't like my thought.

I thought the employer could establish a procedure for making this determination. Do the temporary regulations under 414(q) still apply? Here is the section of the regulations I was remembering:

26 C.F.R. § 1.414(q)-1T Highly compensated employee (temporary) - under answer 3

(b) Rounding and tie-breaking rules. In making the look-back year and determination year calculations for a determination year, it may be necessary for an employer to adopt a rule for rounding calculations (e.g., in determining the number of employees in the top-paid group). In addition, it may be necessary to adopt a rule breaking ties among two or more employees (e.g., in identifying those particular employees who are in the top-paid group or who are among the 100 most highly compensated employees). In such cases, the employer may adopt any rounding or tie-breaking rules it desires, so long as such rules are reasonable, nondiscriminatory, and uniformly and consistently applied.

Do those temporary regs still apply? If so, thanks!

Which would lead me back to my original question? How would I choose? All carry the same title. None are officers.

that leaves me with age and length of service?

It's however you want to do it, as long as it is fair, consistent and non-discriminatory.

use height

Do those temporary regs still apply?

That would discriminate against us "vertically challenged" folk

It looks they they still apply. I just did a review and it did not appear to have an expiration date. Maybe hat size is better.

I believe they still apply

Hat size would discriminate against Barry Bonds

Deferral amount, perhaps? If same, shoe size.

I'm thinking along those same lines, with a twist. Whoever does not defer, pay them $50 more. Takes care of tie breaker, b/c no tie breaker.

Shoe size might imply gender discrimination. How about the sum of the digits in her/his phone number?

Whatever criterion you use, it might be better if it is something you can use again in future years, to be consistent.

If you pay someone $50 to not defer aren't you creating a "significant detriment" to their exercise of their ERISA rights

I'd go with scrabble score for their last name (no hyphens either, that would make a mockery of the whole thing)

Not a detriment -- a bonus on the last day of the year rewarding them for making your test work better.

The scrabble score would need to be limited to a particular number of letters to avoid rewarding those with long, unpronouncable names.

General rule -- if name is more than three syllables

Third syllable is replaced with Smith and all subsequent syllables are dropped.

Just thought that I would share our office rule.

Too late for 2007, tho'

For a tie-breaker, have them all come in and and do a rock-paper-scissors contest.

They may be able to glean some tips from the World RPS (Rock-Paper-Scissors) website. (Yes there is one!)

http://www.worldrps.com/