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Top Paid Group


cpc0506
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Client has 2 employees. One owner, other not. Both are HCE.

If the client elects TOP PAID GROUP ELECTION, who is in the top of the test?

Number of employees equals 2. 20% of 2 is 0.4. Rounding up the count is 1. Is this 1 in addition to the owner, so my HCE count would still be 2 or is the count just 1 and the owner take that spot.

Can I get a discussion on this?

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Client has 2 employees. One owner, other not. Both are HCE.

If the client elects TOP PAID GROUP ELECTION, who is in the top of the test?

Number of employees equals 2. 20% of 2 is 0.4. Rounding up the count is 1. Is this 1 in addition to the owner, so my HCE count would still be 2 or is the count just 1 and the owner take that spot.

Can I get a discussion on this?

Why would they want to do that? If they are both HCE's - they would pass automatically. Class allocated - give owner a contribuiton the non-owner - 0% - still pass since there are no NHCE's.

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any 5% owners are HCEs no matter what the comp.

my strategy was to run the top paid group first (in your case, grab the highest paid of the 2 ees) and then add back any 5% owners. if there is a tie in comp, the regs say use any tie breaking procedure that will pass the test....er I mean any reasobale criteria to break the tie.

why they woud have the top paid group election with 2 employees and both HCEs is beyond me. If they are both HCEs you pass testing no matter what.

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any 5% owners are HCEs no matter what the comp.

my strategy was to run the top paid group first (in your case, grab the highest paid of the 2 ees) and then add back any 5% owners. if there is a tie in comp, the regs say use any tie breaking procedure that will pass the test....er I mean any reasobale criteria to break the tie.

why they woud have the top paid group election with 2 employees and both HCEs is beyond me. If they are both HCEs you pass testing no matter what.

Why the top paid election was chosen in the document I do not know.....

But for discussion purposes, I understand that the owner is a HCE regardless of compensation amount, but if you were do just do the mathematics, if there are a total of 2 employees and 20% of 2 is 0.4 and you round up, that is 1 employee. Correct? So the question is: is my HCE count 2 - the one HCE and the one employee from the test calculation?

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any 5% owners are HCEs no matter what the comp.

my strategy was to run the top paid group first (in your case, grab the highest paid of the 2 ees) and then add back any 5% owners. if there is a tie in comp, the regs say use any tie breaking procedure that will pass the test....er I mean any reasobale criteria to break the tie.

why they woud have the top paid group election with 2 employees and both HCEs is beyond me. If they are both HCEs you pass testing no matter what.

Why the top paid election was chosen in the document I do not know.....

But for discussion purposes, I understand that the owner is a HCE regardless of compensation amount, but if you were do just do the mathematics, if there are a total of 2 employees and 20% of 2 is 0.4 and you round up, that is 1 employee. Correct? So the question is: is my HCE count 2 - the one HCE and the one employee from the test calculation?

Which one had the highest compensation in the prior year?

Laura

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any 5% owners are HCEs no matter what the comp.

my strategy was to run the top paid group first (in your case, grab the highest paid of the 2 ees) and then add back any 5% owners. if there is a tie in comp, the regs say use any tie breaking procedure that will pass the test....er I mean any reasobale criteria to break the tie.

why they woud have the top paid group election with 2 employees and both HCEs is beyond me. If they are both HCEs you pass testing no matter what.

Why the top paid election was chosen in the document I do not know.....

But for discussion purposes, I understand that the owner is a HCE regardless of compensation amount, but if you were do just do the mathematics, if there are a total of 2 employees and 20% of 2 is 0.4 and you round up, that is 1 employee. Correct? So the question is: is my HCE count 2 - the one HCE and the one employee from the test calculation?

Which one had the highest compensation in the prior year?

It depends on who has the highest compensation. If the non-owner has the highest - you will have to include both.

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