Is employee of joint venture treated as an HCE if Compensation Less Th

[Guest Edward McElroy]

During 1997, Individual A was employed by Company A and participated in Plan A. A was considered an HCE under Plan A. For the first 6 months of 1998, Individual A was employed by Company A and continued to participate in Plan A. Effective July 1, 1999, Individual A was employed by joint venture (Company A and Company b) and participated in Plan B. A's compensation for the last six months of 1998 was less than $80,000. While A may be considered an HCE for purposes of Plan A's ADP test for 1998 (based on lookback year), I believe he would not be considered HCE under Plan B. See 1.414(q)-1T, Q&A-13(B) and ©. Any thoughts? Thanks.

[MWeddell]

You're correct, assuming that company A owns less than 80% of the joint venture. Note that if company A owns more than 50% of the joint venture, that both plans are aggregated for 415 purposes. Usually, the term "joint venture" implies an exact 50/50 split in ownership, so I'm probably being overly cautious to mention these concerns.