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Unfortunately, it is going to get worse and not better. ASPPA released a new comment letter to the IRS today. A link to the letter is below. I haven't been able to decide which letter is worse, this one or their previous one. The new one looks like it was written as two separate letters by people with completely opposite opinions, then combined into a single letter. In one place, it has a detailed description of the 1.401(k)-3(e)(1) prohibition on mid-year amendments to plan provisions that satisfy the rules of 1.401(k)-3 and points out this means the regulations contemplate mid-year amendments to non-safe harbor provisions. Then, in another part it says that the published guidance prohibits virtually all mid-year amendments of any kind to safe harbor plans. That last part is a new one on me because they have been claiming the supposed near total prohibition comes from consistent informal IRS comments at conferences. Of course, they have claimed repeatedly that it was said by the IRS at the 2011 annual conference and it was not. Then, they go on to recommend that the standard for allowable mid-year amendments be amendments that would not change language in the safe harbor notice. The content requirement for the notice covers many plan provisions that do not have to satisfy requirements of 1.401(k)-3 or 1.401(m)-3, so I don't see this request as being much different than saying no amendments at all. They do request a few exceptions, including mid-year amendments that do not affect the operation of the plan such as address and phone number changes. After the statements at the 2012 annual conference that they never said amendments like address and phone number changes couldn't be made, I find it surprising they would now ask the IRS to say they can be done. And, yes, they ask again for a list of allowable amendments. It would be a heck of a lot better for all of us if they would ask the IRS to confirm what kinds of amendments are prohibited. http://www.asppa.org/Document-Vault/PDFs/GAC/2013/101713comm.aspx

a good question, in fact, I would go so far as to say an excellent question. I don't recall seeing an example like this written up anywhere. You sound like the criminal mastermind on a Columbo mystery, worried, and thinking "I have the perfect crime to avoid top heavy. What am I missing?" I think Dolly Parton was a special guest star.... so Detective Columbo shows up, runny nose, a cough, a sneeze... "I'm thorry, but I have a bit of a code" But the " Code" says (416(g)(2)(A)(ii)) "Required Aggregation - each plan of the employer which enables any plan described in subclause (I) [any plan with a key employee] to meet the requirements of section 401(a)(4) or 410" now looking at the facts, if plan A only has the 2 owners, it has the key employees. But there are NHCEs. so in testing Plan A for coverage, it would fail testing because no NHCEs are benefiting (as opposed to there not being any NHCEs at all). Thus you have to aggregate for coverage to pass 410(b). But once you aggregate for 410, you have to aggregate for top heavy. And of course, Columbo would conclude with "Got you!"