drewmc2001

Thanks for the response, Tom. There is only 1 HCE and a total of around 20 employees, including 7 new hires and 6 termed employees. I looked at the issue of a partial termination, but found that historically their routine termination exceeded 20% in most of the plan years that we have been the TPA. I looked at the IRS website regarding partial termination and it appears that "routine turnover" even if high isn't considered a partial termination. Several of the terminating participants (NHCEs) worked in excess of 500 hours. If any of this information would change your response, any update would be greatly appreciated. Thanks! Andy

I had a plan recently that failed Top Heavy testing. This is nothing new for the plan sponsors and they are used to making the 3% top heavy contribution. The problem that I ran into, was that after allocating a 3% top heavy contribution to all eligible participants, I ran top heavy testing and they were still failing both the ratio percentage test (401a) and the average benefits test. My question is this, does the plan need to do something beyond simply funding the 3% Top Heavy contribution to all eligible participants? Thanks, Andy