Do Family Aggregation Rules Apply in Look Back Year Determination for

[Guest Edward McElroy]

An employer maintains a profot sharing plan with an 11/30 year end. Is an adult child with compensation less than $80,000 treated as a highly compensated employee by reason on the family aggregation rules? Family aggregation was repealed for plan years beginning after December 31, 1996. The first year without family aggregation would be December 1, 1997. In determining if the child was a highly compensated employee, the Company would consider the look-back year. As the look-back year was before the repeal of family aggregation, is the child considered highly compensated for a plan year after the effective date the repeal of family aggregation.

[imchipbrown]

Child is Highly Compensated, not by family aggregation, but by Code Section 318 (if parents are 5% shareholders, so is he/she/it).

[Guest Beavis]

I'm not sure that based on the facts given that you can assume that this child is the offspring of a 5% owner.

Assuming not, then if the child earned less than 80,000 in the 12 month period immediately preceding the start of the current plan year then no, the kid is not an HCE. If the kid has an owner in the family, then yes he/she would be an HCE, regardless of compensation.