Possible to be HCE and NHCE in same year?

[gregburst]

Company A is owned 100% by Pat. Chris is a long-time employee and participant in Company A's plan. Chris is not related to Pat, and Chris is NHCE right now.

Pat and Chris will soon form Company B, owned 49% by Pat and 51% by Chris. Before the end of the year, Company B will become a co-adopter of the Company A plan. Since there is no ASG (they are manufacturers) and no controlled group, the current plan will thus become a MEP. As such, Companies A and B will have to satisfy separate discrimination tests for 2012.

It seems that Chris will be NHCE w/r/t A's testing, but HCE w/r/t B's testing. Can that be right? I've never heard of it, so I'm guessing Christ must be treated as HCE for the full year for all parts of the plan.

Agree?

[Guest GeerTom]

The answer to your question is yes. An employee is an HCE of an employer, and can be HCE with respect to one and not another.

Do you want this to be a MEP? You can avoid that just by (1) separately chargiing contributions, and (2) separately allocating or offsetting forfeitures.

[gregburst]

The answer to your question is yes. An employee is an HCE of an employer, and can be HCE with respect to one and not another.

Do you want this to be a MEP? You can avoid that just by (1) separately chargiing contributions, and (2) separately allocating or offsetting forfeitures.

Interesting. So Chris will be NHCE for A and HCE for B?

Contributions will be charged separately, as will forfeitures. So it won't be a MEP. Is it then considered a single employer?