Top Heavy Plan

[Guest CAP]

My question pertains to an employer who leaves a PEO midway through the Plan Year. If this employer was top heavy, are they required to provide the minimum contribution to their employees?

I remember reading somewhere that, unlike a single employer who terminates their plan, the adopting employer under a PEO who leaves is still required to provide the top heavy minimum. This is because the "Plan" of the PEO is not terminated, just the adopting employers relationship with the PEO.

Another argument was that, since the PEO was the "Employer", and their "Employees" were not employed on the last day of the plan year, no minimum is due.

Does my memory serve me correct, or do they need to provide the minimum?

Thank-you in advance for your replies.