Attribution for Discrimination Testing

[metsfan026]

Adult Child #1 - Owns 50% of the company
Adult Child #2 - Owns 50% of the company

Mom & Dad both also work there, but make under $100k each. 

So, based on salary they wouldn't be considered HCE for testing purposes.  I don't believe the attribution goes up, so they wouldn't be considered HCE for testing either, right?  I know that's how it applies for ownership/controlled groups.  I just wanted to confirm it's the same for the testing.

Thanks everyone!

[Bill Presson]

HCE determination (and lots of other things) is made under section 318 and is different than attribution for controlled groups (section 1563). Under 318, a parent is deemed to own a child's stock no matter the age of the child or the percentage ownership in the business.

I love this summary from Lincoln.

https://www.lfg.com/wcs-static/pdf/Attribution of Ownership in Retirement Plans - PDF.pdf

[Jakyasar]

Salary not relevant, all HCEs. If a DB plan, possible PBGC coverage too.

[401kology]

On 9/21/2022 at 12:11 PM, Bill Presson said:

HCE determination (and lots of other things) is made under section 318 and is different than attribution for controlled groups (section 1563). Under 318, a parent is deemed to own a child's stock no matter the age of the child or the percentage ownership in the business.

I love this summary from Lincoln.

https://www.lfg.com/wcs-static/pdf/Attribution of Ownership in Retirement Plans - PDF.pdf

Great summary Bill! RTR!