Top Heavy Minimum for Safe Harbor Plan

[Guest Asvedlow]

If a plan is amended to a Safe Harbor plan, and no other contributions are made to the plan after the effective date of the Safe Harbor provision other than the deferral and match under the safe harbor formula, would the plan still be exempt from 416 application even though it holds assets that were not under the terms of the Safe Harbor conditions (contributed prior to the inception date of the Safe Harbor amendment)? In addition, doesn't it seem odd that the exemption from 416 would eliminate non participants and those participating at less than a 3% level to be excluded from a minimum now? Seems sort of out of kilter to me though that is what the law reads. Thoughts anyone?

[Tom Poje]

in some ways, the situation is not much different than a SIMPLE 401(k) is it...

no top heavy, pass ADP test, etc, as long as no other contributions are made, so saying something is out of kilter doesn't work...the regs are the regs.

I am not sure if anyone one knows for sure about the top heavy issue, for example, what happens when previously vested $ become forfeitures?

[R. Butler]

Is any additional guidance on this issue expected? We have a couple of Safe Harbor plans that have prior nondiscretionary money in the Plan. I am a little concerned that a reallocated forfeiture will take away the automatic pass for top heavy.