rfahey Posted January 14, 2014 Posted January 14, 2014 I have a dentist with a SARSEP plan. He has a son who is age 21 and works part time on his website and has worked for him for over three years now. Questions: Must the son come into the plan ? If he does not make any elective deferrals does it help his father in any way for the ADP test ? How is this test done with the son and the father ? For ADP testing purposes is he considered a HCE ? Is the son counted for the rule that says that 50% of all eligible employees must defer ? If so and he needs to defer will this hurt his fathers elective contribution percentage. Many thanks
ETA Consulting LLC Posted January 14, 2014 Posted January 14, 2014 The son must be allowed entry. It doesn't impact the test if the son does not defer since each HCE's deferrals are limited to 125% of the Average rate of deferrals for NHCEs. Good Luck! CPC, QPA, QKA, TGPC, ERPA
Gary Lesser Posted January 23, 2014 Posted January 23, 2014 Agreed. Also, the son (an "employee") is counted for purposes of the 50% deferral test.
rfahey Posted January 24, 2014 Author Posted January 24, 2014 Thank you. What is the best route for the father on the son ?? Should the son make elective deferrals ? Is the son limited by the 1.25% since he is related to the father ? How does the 50% test work with the son ? Bob
BG5150 Posted January 24, 2014 Posted January 24, 2014 If all the kid is doing is working on the website, could they pay him on a 1099 as a contractor? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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