Given the ERISA regulations associated with maintaining a qualified retirement plan, I highly recommend that you have a qualified QPA from a third party administration firm performing the testing for you or at the very least advising you on the classification of the employees for testing purposes. As an example, an employee that is related to an owner may be classified as an HCE regardless of their salary or there may be a group of employees that have been excluded in the plan document. There are several factors that need to be considered when conducting the ADP (actual deferral percentage of HCE compared to non-HCE), ACP (actual contribution percentage – matching contribution test) and top heavy testing. Engaging an experienced professional will save you time and money in the long run. If you need assistance in connecting with a third party administration firm please contact me at 415-345-8185 or email email@example.com.
The posted information is for informational purposes only. This message does not constitute an offer to sell or a solicitation of an offer to buy any security. All opinions and estimates constitute Karp Capital's judgment as of the date of the report and are subject to change without notice. Accordingly, no representation or warranty, expressed or otherwise, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or timeliness of the information contained herein. Securities offered through Financial Telesis Inc., member SIPC/FINRA. Financial Telesis Inc. and Karp Capital Management are not affiliated companies.
The employer can elect HCE or the top-paid group. See the IRS pub 7334 for details: http://www.irs.gov/pub/irs-pdf/p7334.pdf
Another resource is the always fun to read U.S. Code: http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapD-partI-subpartB-sec414.pdf
Your plan administrator should be able to take your census and determine this info.