Change Top Heavy from all to Non Key only during RAP?

[SRM]

Is top heavy minimum (to key employees) a protected benefit?

401(k) Profit Sharing Plan Pre-Gust document provides top heavy minimum contribution to all employees (not just non-keys). For PYE 12/31/01, employer wants to make top heavy minimum to non key employees only.

Considering the remedial amendment period, can the GUST restatement of the document provide the top heavy minimum only to non-keys?

Note, in prior years the Profit Sharing contribution was greater than top heavy minimum for all participants.

[mbozek]

If the TH benefit accrued as of 12/31/01 then I think the reduction would be a cutback. The only way around it would be if the plan was amended to permit HCE to waive an accrued TH benefit but I have never advised such a move. U need to review the Gust restatement to see if TH minimums are provided only to nHCEs and whether it would be retroactive to 1/1/01.

[SRM]

Thanks for the response. The GUST restatement has not been completed yet (vol. submitter).

When the restatement is completed, can the document make this change (top heavy to non keys only from top heavy to all) effective back to 1/1/2001?

Or

Would an amendment have to have been adopted prior to the effective date of this change?

[Blinky the 3-eyed Fish]

The amendment have had to have been adopted before any of the keys accrued the right to the contribution. There is no retroactive ability to remove the requirement to not give keys the top heavy minimum.