Spouse of owner always HCE

[ombskid]

I recently reviewed a 2008 ADP test that had the low paid spouse of the 100% owner as a NHCE.

I thought all 5% owners were HCE's. Isn't the spouse an owner via 318 attribution?

Spouse had 401k deferrals of around 90% so the adp test was significantly impacted

[Bird]

Yes, spouse is an HCE. What you see is not that uncommon, especially with large companies with centralized processing centers. If the client doesn't check a box properly, no one will ever know. The last two plans I looked at that were serviced by a large payroll company had this error. (One client decided to stay with them because they liked their testing results better than mine!)

[austin3515]

Plus, they'll probably not tell them that they need to make a top-heavy contribution. After all, they didn't check "Yes" next to the box that says "were more than 60% of all assets allocated to key employees?"