top heavy minimum

[Guest rhp]

An employer group sponsors a defined benefit plan and a 401k plan. The top heavy minimum is provided in the defined benefit plan and not in the 401k plan. If an employee who participates in both plans has 800 hours and is a year end employee, I have assumed that she does not get a top heavy minimum at all. She does not meet the requirements to receive it in the defined benefit plan. And the 401k plan says the top heavy minimum is provided in the defined benefit. Do you agree with this? Thanks.

[Tom Poje]

I would disagree.

1.416-1 Q & A m-10 clearly states that a participant in a top-heavy defined contribution plan MUST be provided the minimum if he/she is employed on the last day of the year.

end discussion.

consider a 401k plan with immediate eligibility, and a defined benefit plan with a 1 year wait. That right, you would have a bunch of people due a top heavy, but are not even eligible for the defined benefit. now what are you going to do?

one of the plans needs to be amended to handle the situation you described. remember, a plan can have less restrictive requirements...e.g. the top heavy minimum could be given to those with less than 1000 hours in the DB plan...

[david rigby]

I agree. And I suggest that the language in the 401(k) plan is deficient unless it already contains provision of what happens if "the other plan" does not (for whatever reason) provide the TH minimum.

[actuarysmith]

I concur with the others. This is one of those cases where the code (416) overrides whatever your document says. If you are in a prototype, I bet that it addresses this issue anyway. check under the top heavy section.