Top-paid group

[abanky]

I understand that the Top-paid group election can lower the # of HCE's for testing. Is this true?

Can I elect year to year? does it need to be in the document? what are the restrictions?

[Tom Poje]

it has to be in the document, and the IRS generally frowns upon a series of amendments flip flopping anything back and forth.

a simple example:

100 employees

20% of that is 20, so in the top paid group you would have 20 possible HCEs.

(if your company has less than 20% of the employees who would be HCE, then top paid group is not going to change anything)

after you have determined the HCEs by comp, you still add back in any 5% owners that weren't already included.