HCE determination

Hi

Company owned by dad and son 50/50.

Company also employs mom and daughter (son's sister).

All above are HCE's for 2021.

On March 1, 2022, dad sell his portion to son and son becomes 100% owner.

When does sister become a non-HCE?

Thank you

Someone who is a 5% owner in the current or prior year is an HCE. I don't see an exception for attribution but maybe I'm missing one. Therefore, assuming a calendar year plan. The sister would be HCE for 2022 and 2023 but not 2024.

5 hours ago, Lou S. said:

Someone who is a 5% owner in the current or prior year is an HCE. I don't see an exception for attribution but maybe I'm missing one. Therefore, assuming a calendar year plan. The sister would be HCE for 2022 and 2023 but not 2024.

Agree with Lou. Just had a very similar issue and we did extensive research to try and get that stopped a year early. No luck.