abanky
Jan 23 2007, 08:22 AM
I understand that the Top-paid group election can lower the # of HCE's for testing. Is this true?
Can I elect year to year? does it need to be in the document? what are the restrictions?
Tom Poje
Jan 23 2007, 10:43 AM
it has to be in the document, and the IRS generally frowns upon a series of amendments flip flopping anything back and forth.
a simple example:
100 employees
20% of that is 20, so in the top paid group you would have 20 possible HCEs.
(if your company has less than 20% of the employees who would be HCE, then top paid group is not going to change anything)
after you have determined the HCEs by comp, you still add back in any 5% owners that weren't already included.