imchipbrown Posted June 19, 2003 Posted June 19, 2003 I'm setting up a 401(k) that initially will have no NHCEs. Down the road, some will be hired and eventually become eligible. Plan effective calendar 2003. NHCE hired after 7/1/03. Year of service after 7/1/04 eligible 1/1/05. How is it determined what the maximum deferrals are for the HCEs in 2005? Say the testing method is prior year.
R. Butler Posted June 20, 2003 Posted June 20, 2003 You'd have to switch to current year testing. Your prior year NHCE% would be 0.
Guest cease Posted June 20, 2003 Posted June 20, 2003 Will this plan have HCEs because all of them are 5% owners? If not, is there any chance that you end up with NHCEs due to the top-paid group rule?
imchipbrown Posted June 20, 2003 Author Posted June 20, 2003 I'm deliberately not using the top 20% rule to include a non-owner over $90,000 as a HCE. The rest are family of the owner (wife, son, daughter), so HCEs by attribution. Interestingly, non-owner is not Key, so 3% TH is an issue. Owner will be deferring close to 50% of comp and match close to 100% of deferral.
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