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Full Version: If a person owns EXACTLY 5% of the plan sponsor, is he or she a "

BenefitsLink Message Boards > Retirement Plans > 401(k) Plans

CGBS

Oct 19 2000, 01:21 PM

If a person owns exactly and nor more than 5% is that person an HCE? I.E. Is it a MORE THAN 5% owner?

Thanks for your help.

Alf

Oct 19 2000, 02:26 PM

It is MORE than 5%.

For purposes of the HCE rules, IRC Section 414(q)(2) cross references the 416 definition of 5% owner. IRC Section 416(i)(1)(B) defines 5% owner as a person who owns more than 5% of the outstanding stock (or possesses more than 5% of the voting power) of a corporation. For non-corporate entities, a 5% owner is anyone who owns more than 5% of the capital or profits interests of the employer.

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