SARSEP top-paid group

[Guest JPAdmin]

Can anyone advise on the definition the of a top-paid group?

"for years before 2002, the top 20 percent of employees, ranked by compensation paid durring a given year, are considered members of the top-paid group once the election is made."

Are these eligible employees or all employees?

Thanks!

[Gary Lesser]

[From Temp Reg 1.414(q)-1T]

Q-9: How is the "top-paid group" determined?

A-9: (a) General rule.

An employee is in the top-paid group of employees for a particular year if such employee is in the group consisting of the top 20 percent of the employer's employees when ranked on the basis of compensation received from the employer during such year. The identification of the particular employees who are in the top-paid group for a year involves a two-step procedure:

(1) The determination of the number of employees that corresponds to 20 percent of the employer's employees, and

(2) The identification of the particular employees who are among the number of employees who receive the most compensation during this year.

Employees who perform no services for the employer during a year are not included in making either of these determinations for such year.

(B) Number of employees in the top-paid group --

(1) Exclusions. [Reserved]

See section 1.414(q)-1, Q&A-9(B)(1) for further information.

(i) Age and service exclusion.

The following employees are excluded on the basis of age or service absent an election by the employer pursuant to the rules in paragraph (B)(2) of this A-9:

(A) Employees who have not completed 6 months of service by the end of such year. For purposes of this paragraph (A), an employee's service in the immediately preceding year is added to service in the current year in determining whether the exclusion is applicable with respect to a particular employee in the current year. For example, given a plan with a calendar determination year, if employee A commences work August 1, 1989, and terminates employment May 31, 1990, A may be excluded under this paragraph (B)(1)(i)(A) in 1989 because A completed only 5 months of service by December 31, 1989. However, A cannot be excluded pursuant to this rule in 1990 because A has completed 10 months of service, for purposes of this rule, by the end of 1990.

(B) Employees who normally work less than 17 1/2 hours per week as defined in paragraph (d) of this A-9 for such year.

© Employees who normally work during less than 6 months during any year as defined in paragraph (e) of this A-9 for such year.

(D) Employees who have not had their 21st birthdays by the end of such year.

[Guest JPAdmin]

Thanks Gary:

So the fact that the plan is a SARSEP has no impact on who is looked at. Since eligibility can be quite different on this type of plan it would make sense to use a different rule. Thanks for the information, I appreciate it.