HCE Status

[Medusa]

Help... can anyone point me to anything that indicates whether elective deferrals to a health savings account (HSA) are added back to compensation, to get to 415 compensation for HCE determination? My gut says yes, but I would like something else to say yes as well.

Thanks!

Med

[SheilaD]

Is an HSA considered to be a type of cafeteria plan? If so this should help. I'm not very familiar with HSA's so I don't know if this will help.

TREATISE, PENSION-ANSWER-BOOK, Q 3:7 How is compensation defined for purposes of determining who is an HCE?

How is compensation defined for purposes of determining who is an HCE?

The definition of compensation is the same as is used for purposes of the annual addition limitation applicable to defined contribution plans (see Q 6:41). This means that elective or salary reduction contributions to a 401(k) plan (see Qs 27:12, 33:30), a cafeteria plan, a simplified employee pension (SEP; see Q 32:1), a SIMPLE IRA plan (see Q 33:9), 403 (b) plan (see Q 35:1), or a qualified transportation fringe benefit plan are included. Only compensation received by an employee during the look-back year (see Q 3:10) is considered in determining whether the employee is an HCE (see Q 3:3). Compensation is not annualized for purposes of determining an employee's compensation in the look-back year. [i.R.C. §§ 414(q)(4), 415©(3); Temp. Treas. Reg. § 1.414(q)-1T, Q&A-13; IRS Notice 97-45, 1997-2 C.B. 296]