Is Employee an HCE?

[DLavigne]

A plan has a plan sponsor and two participating employers (PE1 and PE2). The plan sponsor is owned by Scott (100%) and PE1 is also owned by Scott (100%). PE2 is owned by Robert (75%) and Chad (25%). Robert is Chad's father. So sponsor and PE1 are controlled but PE2 is not part of the controlled group.

Cheryl, who has no direct ownership of anything is Chad's mother and Robert's ex-wife. She has no family relationship with Scott. She works for the sponsor.

Is Cheryl an HCE? Does family attribution cross companies that share the same plan but are not part of a controlled group?

[ETA Consulting LLC]

No. HCE determinations are at the "Employer" level. If I work for these two companies during the same year; and make $75,000 for PE1 plus $80,000 for PE2, I would "NOT" be an HCE because I didn't exceed the limit for any one Employer. Now, this would be different if these two companies were part of a Controlled Group.

Good Luck!