Top Heavy Testing-Controlled Group

[Guest BAR]

Do all of the plans of the employers of a controlled group have to be aggregated for top heavy purposes?

[rcline46]

Yes, under 414(B) and 414(m) - all considered together for Top Heavy.

[Guest Hans Moleman]

I am not sure I agree with the last answer. Plans have to be aggregated for top heavy purposes for each plan in which a key employee of the employer participates or if the plans are aggregated for coverage and nondiscrimination. All employees of the controlled group are considered one employer of course.

[R. Butler]

I am fairly certain that that a required group would not only consist of each retirement plan in which a key employee is currently a participant, but also each plan in which key employee has participated in any of the 4 preceding years.

[Guest Hans Moleman]

You are correct, sorry for not being more precise. To be extra precise, the key employee must participate in the plan year that contains the determination date or any of the preceding four years.

[david rigby]

I agree with last two comments by R. and Hans. Of course, the plans in question must be within the controlled group.

[Guest]

actually have a 'classic' scenario of how this works. Of course it involves lawyers. they set up a separate 401k plan just for the associates - many who are hces but are not considered key - the associates have no ownership and are not owners. because the associates are HCEs they are treated as included and not benefiting for coverage purposes. The non-associate plan passes coverage as a result, and therefore top heavy is given only in that plan.