HCE calculation - non-calendar plan year

[Guest Achilles]

I'm a bit confused - I'm testing for the year 11/1/02 - 10/31/03.

This would be the 2002 year I'm testing for, with 2001 being the look-back year.

I have a person that, during the plan year 11/1/01 - 10/31/02 had a salary of $89,000.

I know that for 2002 the HCE comp. is $90,000, and for 2001 it was $85,000.

Is this person an HCE for the year 11/1/02 - 10/31/03? I believe he is.

My confusion was that I am testing for the 2002 year, and 2002 is $90,000 for an HCE.

I was then saying to myself, "who in 2001 earned more than $90,000".

I should have said, "2001 is the look-back year, and 2001's HCE comp. is $85,000 - who during the 2001 plan year earned more than $85,000, these people will people HCE's for the 2002 year test"

Thanks in advance!

[Blinky the 3-eyed Fish]

I am not sure if this is a question, an answer or both. He is an HCE based on the information provided. Now if there is the top paid election or calendar year election, it could be a different story.

[Tom Poje]

in other words, suppose plan made a calendar year election. (Document driven, or if I understand things correctly from reading the Erisa Outline Book, if document does not have HCE language then it is your choice)

since plan year begins 11/1/02 you would look at comp earned

1/1/2002 - 12/31/2002

I assume then you use the 2002 limit which is 90,000 - so conceivably the person might not be an HCE