Top-Paid vs Lookback - 2 plans & different options

Might be inheriting 2 existing plans for 2025, one has top-paid and one has lookback definition for HCE determination.

Too late to change anything for 2025.

Did some research on BL and also Notice 97-45, not sure I located the answer but looks like I can only use "lookback" method.

Will be amending to match during 2026.

Any comments or cites are appreciated.

Thank you

Jak, I’m confused about your concern on the look back definition of an HCE. To me, that’s just the standard way of determining an HCE. 

Hi Bill

It is 2 separate plans in a combo situation. One plan has top paid election to determine HCEs and the other has lookback election definition.

Ahh. Didn’t realize you meant two plans with the same sponsor. 
 

I’ll be curious to see others thoughts. 

If you have multiple plans (including plans within a controlled group) they all must use the top paid group rules or else none of the plans can use the top paid group rules.

If you have multiple plans they all must use the calendar year look-back rules or else none of the plans can use the calendar year look-back rules. This most likely would be an issue come into to play if one or more of the plan has a non-calendar year plan year.

The top paid group rules and calendar year look-back rules are applied independently from each other.

Amending the plans now - like ASAP - is easy and will avoid getting overlooked with the looming chaos of SECURE 2.0 amendments and Cycle 4 amendments coming later this year.

Keep in mind, though, that the HCE determination is critical to coverage, nondiscrimination and ADP/ACP testing.  The plan cannot just amend now and disregard the fact that prior years' testing did not determine HCEs accurately.

Agree with your analysis based on my research. Thank you