HCE determination

[R. Butler]

Co. A owned 100% by Person Z. W,X & Y are the employees. Co. A sponsors a 401(k) plan.

Person Z (90% ownership) partners with Person Y (10% onwership) to form Co. B. There are not any employees other than Y & Z. Co. B does not adopt Co. A's plan.

It is my understanding that Person Y is an hce in the Co. A 401(k) plan because of his ownership in Co. B and the fact that Co. B is not a participating employer does not change that determination.

Am I missing anything?

Thanks for any guidance.

[Lou S.]

Sounds correct.