Determining Top 25 for Lump Sum Restrictions

[Guest David M]

Revenue Ruling 92-76 states the following: "The affected employees are the 25 highly compensated employees or highly compensated former employees of the employer who have the greatest compensation from the employer in the current or any prior plan year (“top 25 highly compensated employees”)."

Here and elsewhere, there does not seem to be a distinction between active employees and terminated vesteds on the one hand, and all employees who have ever worked for the company, whether they have been paid out or not, on the other.

I would be interested in perspectives on whether a narrow reading or a broad reading of the Top 25 pool applies.

[MGB]

It is a very broad reading. It doesn't make any difference if the former employees were ever in the plan, have benefits currently in the plan, etc. If a person had a million dollar salary 40 years ago and no one has been that high since, that person is still at the top of the high-25 group even if no longer around and even if he was never in the plan.