What is compensation threshhold for HCE determination for plan year beginning 7/1/02?

[Guest Marino13]

If I am preparing a 2002 Schedule T for the plan year 7/1/2002 - 6/30/2003, what is the compensation threshhold used to determine who is highly compensated (based solely on compensation, not 5% owners)?

I know that I must use the compensation earned from 7/1/2001 - 6/30/2002, but what amount makes an employee an HCE for purposes of the 2002 Schedule T?

[Mike Preston]

You use the threshold for the year that the compensation period BEGINS in, which is 2001. In 2001 the threshold was $85,000 <= Corrected to conform with Tom's posting, which I appreciate.

[Tom Poje]

prior 12 months began in 2001, so the the threshhold was 85,000.

It could have been possible to use a calendar year election, which would have used comp from 1/1/2002 - 12/31/2002 and then the ee would have had to have 90,000. But that depends on what the document says.

[Guest Marino13]

The document says compensation is based on the plan year (7/1 - 6/30).

So the threshhold is $85,000? You use the threshhold as of the beginning of the plan year in which the compensation was earned?

[Tom Poje]

correct. current year never matters.

always use lookback year and the value for the calendar year that begins in that year