Prior Year testing and change in testing definition of compensation

[Richard Anderson]

The plan uses prior year testing.

For the 2002 plan year, one low paid NHCE deferred a large dollar amount. The 2002 definition of comp for testing is less deferrals. For all other years the definition of compensation will not be reduced for deferrals.

My question is: For what year is compensation for HCEs likewise reduced by deferrals?

1. Reduce HCE 2003 comp for deferrals, since this is the HCE data that will be tested against the 2002 NHCE data?

2. Reduce 2002 HCE comp for deferrals, even though the 2002 HCE data is tested against 2001 NHCE data?

Thanks for your help.

Richard

[Tom Poje]

without researching, I would assume you have to be consistent within the test itself.

thus is prior year NHCE is comp - deferral, the HCE for the current year must be the same def (comp - def).

[Richard Anderson]

Thanks.