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Where might we find information on this requirement that non-Key HCEs must receive the SH to be Top-Heavy exempt? My understanding of the rule is based on Rev. Ruling 2004-13, situation 4 and a similar Q&A question at the 2010 ASPPA Annual Conference (bottom of page 10 of the handout). Both specify that all eligible NHCEs in the entire plan must receive the SH to be TH exempt, but neither mentions Non-Key HCEs having to receive the SH. The Q&A response does caution that if the TH plan only provides the SH to those 21 & 1yr, all non-Keys get the TH-minimum, not just those in the otherwise excludable group.

Just wanted to throw it out there to be clear on the rule. When I first learned of the Safe Harbor exception to TH, I learned 'as long as the plan was safe harbor (and no additional contributions were made outside of safe harbor ADP or ACP), then the plan was excepted from TH'. This failed to recognize that under the safe harbor, all Non-key employees (including those who are HCE) must be included in the safe harbor contribution. I, incorrectly, believed that you could give the Safe Harbor to NHCEs only and still be exempted from TH. There 'may' be practitioners today that are under that impression

Also, if it's a SH Match, EVERYONE needs to get at least 3% ER money. If the plan is Top Heavy all participants (employed on last day of plan year) get the TH minimum regardles of the type of SH arrangement. Also, if there are HCEs in the group not getting the SH contribution, that part of the plan does not meet the ADP SH and is subject to the ADP test. edit: SH contributions would be credited toward the TH min.

There is one problem with that. The IRS has not made that statement at a conference. I previously challenged anyone who thinks they have to provide detail as to when and what was said by the IRS representative, but no one responded. I've seen several claims that it was said at by the IRS at the 2011 ASPPA annual conference. I was there and the IRS representatives said no such thing. I have the recording to prove it. If you do a search you should find my old post where I transcribed what the IRS actually said. Ilene Ferenczy made a brief comment that could be interpreted along those lines if you wanted to, but she is not with the IRS. Other ASPPA speakers have made that claim, but none of them are IRS officials. From other discussions with a frequent ASPPA speaker, the IRS may very well have said something along those lines in private meetings with ASPPA. But that is not what ASPPA is claiming. They are claiming the IRS has been saying that consistently at all conferences. If the IRS really said that repeatedly, it should be very simple for someone to provide a recording or transcript where the IRS actually said it. As several of us have pointed out in discussions here, a total prohibition of amendments mid-year to a safe harbor plan is absurd. Likewise, I think another claim that if it is in the safe harbor notice, it can't be changed mid-year is absurd. It has been pointed out that, among other things, they were saying that a Trustee change, plan sponsor name change, address or phone number change could not be made to the document mid-year. Now that the IRS has informally added some new situations where they are willing to say specific amendments can be done (2012 ASPPA annual conference) a couple of ASPPA speakers proclaimed that of course, when they said absolutely no mid-year amendments to SH plans, they didn't really mean you couldn't change things like Trustees or addresses and to think otherwise was being ridiculous. That ASPPA letter also says there is a lack of formal guidance. That is nonsense. There is very specific guidance in the regulations. ASPPA wants a list of all of the amendments that are allowed. What the regulations have is a list of all of the amendments that are prohibited. Except for listed exceptions, you can not amend any provision that satisfies a rule in that section of the regulations. All you have to do is go through 1.401(k)-3 and 1.401(m)-3 to see what rules apply to plan provisions and you have a list of provisions that the regs say can not be amended mid-year. Why in the world would anyone ask the IRS to make a list of every amendment that can be made? I would say what I really think about ASPPA's letter, but I was raised better than that. I'll get off the soapbox now.