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Just to add to your complexity, I just ran across a change for 2006 that may affect your consideration. For 2006 the threshold for being a highly-compensated employee increases to $100,000 from this year's $95,000.


Greetings, Phil, can you or anyone clarify that the test for HCE status in the CURRENT year depends on the compensation in the PRIOR year? In 2005 before I went part-time, I was on track to earn $125K and still earned the bulk of it before going 3/4 time mid-November. In 2006 I will be earning $93,750 - but my reading of meeting the HCE test makes it appear that I am still an HCE in 2006 because of my 2005 income. Is that correct?

Also, what bearing does being an HCE have on any other employer-based contributions to, say, a profit-sharing plan? Is there any special test of a profit-sharing plan as there is for a 401(k)? Thanks in advance for any additional illumination.

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