top-heavy minimum to key employees

[Guest ERIC STRAND]

Let's say our Master Plan guarantees the top-heavy minimum to non-terminated, non-key employees. Can the Employer also make the top-heavy minimum to key employees at their discretion? What if there are non-key employees that terminated with over 500 hours in a standardized Plan who did not receive the top-heavy minimum? In such a situation, would we then have to say it is a "regular" Profit Sharing contribution if the key employees get anything. I guess the non-keys would then get the larger of the "regular" contribution or the top-heavy minimum. My main question-Does the Plan have to specify that key employees definitely will also get the top-heavy minimum in order for them to receive it?

[Tom Poje]

It all depends on the document.

For instance, the Corbel checklist has the following option:

top heavy minimum contribution earned by

a. only non-key employees

b. all participants

in this case

just what part of 'only' or 'all' is not clear - and therefore what gives you the right to allocate to a key employee if the document says 'only non keys?

so, suppose plan is 401k and is top heavy and a key ee defers 3%. The plan has to, at the minimum, put in 3% for the non keys.

Now the key ee says, and I get nothing?

Well, then make a 3% ps contribution. that will cover top-heavy and give the key ee 3% as well. if the key ee fails the hours requirement, then he is out of luck. don't like it? amend the document so keys receive top heavy as well.