HCE Determination Non-Union to Union Transfer

[jgb44]

I have a Union employee for my test year who has prior year compensation as Non-union > HCE $ limit. Do I consider the NU comp for purposes of determining the Union HCE status? Or do I use $0 as my lookback comp because the EE was not Union in the prior year?

Feedback appreciated. Thank you.

[Belgarath]

Interesting question. IMHO:

The general rule would be that yes, you would include this compensation. I think this is supported by the fact that specific exclusions re certain union employees (for the "top paid" test) are provided in 1.414(q)-1T, Q&A-9 (b)(i)(D). So if a specific situation with a specific exclusion doesn't cover your situation, then I think the general rule is that yes, you'd count it.

[Tom Poje]

plus the Code 414(q) simply says and HCE is ANY employee who

1(a). was a 5% owner

(b) in the preceding year had comp >80,000 (as indexed)

there is no exception for someone who had comp while member of an excluded group

[Guest ppapdx]

and to piggy-back off of Tom, 414(q)(4) says you use 415©(3) compensation in the 12 month lookback to determine HCE status. 415©(3) compensation does not exclude pay while not eligible for the plan - and includes any compesnation from the employer (or related employer).