Top Heavy Contribution & Non-ACP Match

[Guest Much2Learn]

We have an employer who matches 401(k) for NHCEs & NonKeys only. The plan is Top-Heavy for 2001.

Because no ACP Test is necessary, I am wondering if the Top Heavy Minimum may be met with the Match. (Everyone's Match is in excess of 3% of comp).

[Guest Much2Learn]

Ahhh, I didn't realize the Plan Document would have the wording . . . super. Would you interpret the match as being included based on the following statement (I'm thinking so!):

". . . notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the Employer's contributions allocated to the Participant's Combined Account of each Non-Key Employee shall be equal to at least 3% of such Non- Key Employee's "415 Compensation . . . "

[R. Butler]

Much2Learn,

I apologize. I misread your question. I immediately deleted my repsonse, but I guess you still saw it.

As I think about it though my answer wouldn't change. Many documents have provisons preventing the use of match to meet top heavy. If the document doesn't have such wording, I don't see why you couldn't apply the match to top heavy.

Sorry if I confused you by dleting the initial response.

[Guest Much2Learn]

No confusion . . . you pointed me in the right direction. Thanks.

[Tom Poje]

while it is true that a match might be used to satisfy top-heavy, if the document is Standardized, I believe that is not an option, whether the document addresses the issue or not. It is simply one of those forbidden issue with Standardized plans.

[Guest Much2Learn]

This is a Corbel document, circa 1994. I still have the old completed checklist in the file. How would I be able to tell that the document is standardized or not?

[Tom Poje]

Now that I think about it,

There is no way you could have a standardized plan.

A standardized plan is one that is guaranteed to pass coverage, therefore all active employees receive a contribution, all terminees > 500 hours receive a contribution.

since you have a group of folks who don't receive a contribution (HCEs), there is no way the plan could be standardized.

silly me.

[Guest Much2Learn]

Oh good, because I was already prepared to be relieved!