top paid group, hce's and failed adp test

[Lori H]

current adp for the hce group is 27.43%

hce's consist of 95% owner, owners father and owners wife. other 5% owner is owners brother who is not an employee.

was wanting to look at top paid group and see if i could help them get a lower refund back.

question is owners wife, who's adp is 61.4%, made only $17k in pye 9/30/05. she would not be in the top paid group, but would she still be considered an hce due to attribution? also, the plan doc. does not clearly state top paid group as an option for adp, just current year data. could a retroactive amendment be done to allow for top paid group?

[WDIK]

The top-paid group election does not allow exclusion of five percent owners.

[Leopurrd]

Also, the IRS has commented that a change in testing method (prior to current or vice versa) is considered a discretionary amendment and must be implemented prior to the end of the plan year. I'm thinking that TPG would be considered a change in testing method as well.

[Lori H]

wdik

even if she is NOT in the TPG due to comp, she would have to be in TPG due to being wife of 5% owner?

thanks.

[WDIK]

What I was trying to say, in my typically obscure way, was that the father and wife are highly compensated employees because of ownership. It does not matter whether they are in the top-paid group or not. The 5% owner test supercedes the top-paid group test.