top heavy satisfied by match & Non-Key HCE

[Earl]

Company has 1 Key employee, a second employee is Non-Key but an HCE, employees 3-6 are NHCEs. Plan is top heavy. There is a Match. All the NHCEs defer and get enough of a match to satisfy the TH min. The non-key HCE does not defer so he gets a 3% PS contrib.

He is the only employee to get a PS contribution.

Does this have to go through 401(a)(4) to show non-discrimination? IOW, can a required contribution create a discrimination issue (and more required contributions)?

[Tom Poje]

interesting scenario

my logic would look at it this way:

under the regs to determine if the plan's formula is safe harbor, you would treat anyone who receives a top heavy as includable and not benefiting. since no one else receives a non elective contribution, plan 'passes' determination that the formula is safe harbor- no a(4) test needed...but then for purposes of the Schedule T (Coverage) you treat ees who receive top heavy only as includable and benefiting. Now you have one HCE receiving a nonelective and zippo NHCEs, so coverage is failed.