Top Paid Group - Tie Breaking equal compensation

[James Matt Ullakko]

Which HCE's have to be picked?

Top Paid Group in effect, I understand rules regarding Rounding to be consistent and don't be discriminatory.

However, what about this situation:

Lookback year comp $200,000 - defers in limitation year $13,000

Lookback year comp $200,000 - defers in limitation year $0

Lookback year comp $200,000 - defers in limitation year $13,000

Lookback year comp $120,000 - defers in limitation year $13,000

Lookback year comp $80,000 - defers in limitation year $0

Lookback year comp $70,000 - defers in limitation year $0

Lookback year comp $60,000 - defers in limitation year $0

Employer establishes policy to consistently round up to whole number if 20% falls on a fraction - they reason that you cannot have a fraction of a person so they will just always include one additional person in the Top Paid Group if 20% is not a whole number.

Above information would yield 1.4 so they need to pick 2 HCE's to include in the Top Paid Group.

Which two of the three $200,000 earners should they pick?

Example in Sal Tripodi's book only address's fraction scenario for how many to include in the TPG.

I'm wondering what you other practicioners are doing to choose identically paid HCE's that have varying deferral rates?

Any help much appreciated.

[Tom Poje]

you are allowed to choose whatever method you want.

Alphabetical, based on date of hire, whatever as long as you arrive at the HCE with 0 deferrals you will arrive at what I suspect most people would do.

[Blinky the 3-eyed Fish]

Are you sure the salaries are exactly $200,000 and not just limited to that due to 401(a)(17)?

[James Matt Ullakko]

Yeah they take an equal salary among the highest tier of compensation in their organization.

Thank you Tom and Blinky.