ADP Test Compensation

[Buckoosier]

I have a client that employs a minor child of the owner, and the child was paid $20 for the year. Is there a de minimis amount of compensation that should be paid in order to include this HCE child in the ADP test?

[Lou S.]

Is the child eligible under the plan?

Would you exclude an eligible NHCE who worked 1 hour in the plan year?

The risk you have with a minor child is always, will the IRS challenge the position that they are actually an employee of the company or not. But there is no de minimus pay limit that I am aware of.

[hr for me]

I have to agree about looking to eligibility. Does the plan have a lower end age limit?

Then I would ask if the compensation earned meets the definition of plan compensation? I've never heard of being able to exclude directly due to a minimum amount of compensation. That is usually covered by eligibility/age limits.

[Buckoosier]

That's what I thought, thank you for your input.