5% Owner -HCE status-ADP test

[Pammie57]

I am never sure when trying to determine who is an HCE - for 5% owners - do we count people who own exactly 5% or people who own more than 5%. I seem to see it described loosely in my reference material. I think it is the latter. (more than 5%).

In an ADP test I am running. I have an employee who owns exactly 5% and earned 124,000 in 2015. She is an officer and earned 180,000 in 2014. She is in the process of retiring and socked away the maximum...which if she is still an HCE makes them fail big-time. I think she still belongs in the HCE group for 2015, but am hoping I am wrong.....

Any thoughts/guidance/what am I missing here comments would be welcome.

[Belgarath]

More than 5%.

P.S. as to the second part of your question, you are correct - HC for 2015, based on 2014 comp.

[Lou S.]

It is more than 5%.

That said 180K in 2014 puts her over the comp limit and she is an HCE in 2015.*

124K in 215 also puts her over the comp limit and she is an HCE in 2016.*

*Though it is possible you are using the top paid group election and she is over the comp limit but not in the TPG.