Top Heavy Plan

[Guest SPOT]

Scenario:

There are participants in plan who are only eligible to defer and haven't met eligibility requirements for ps contribution. Employer is makeing a ps and I originally only considered participants eligible for the profit sharing portion of plan for the top heavy minimum. Do I have to give participants who have only met eligibility requirements for the deferral portion of plan a th minimum?

[jaemmons]

Yes. Top heavy minimums need to be addressed separately. Although you can offset t/h mins by amounts contributed as part of a PS allocation, you must still make sure and provide t/h mins to all non-key ee's who are eligible to participate and who are still employed at the end of the year. Even if the employer did not contribute a PS for the year, the plan is top heavy, and a key ee defers to the plan, they would still be required to deposit the t/h min contribution, in order to satisfy IRC 416 allocation requirements.