Family Attribution Rules

[Guest AP]

Can someone please claify the following:

For family attribution rules to determine HCE for Plan years after 12/31/96, do you apply the effective control test, when the father and adult son owns the company, that is if the father is a 20% owner and the son is a 2% owner with compensation less than 80,000, would the there be attribution between the father and son? What if the son did not own any stock and his salary was less than 80,000, would he be HCE. All that I have read has indicated that there would not be attribution to him from his father if he is under age 21 and as such would not be deemed a 5% owner and as a result would not be a HCE. Can someone verify this?

Thanks.

[david shipp]

For HCE determination purposes, attribution is determined under Sec. 318. Family attribution goes to an individual's spouse, children, grandchildren or parents. No age limits, no requirement that the attributee have any other ownership interest.