Safe Harbor 401(k) and Top Heavy Rules

[Guest SCUDDESLER]

Has the IRS commented upon what Congress means by the phrase "a plan which consists solely of" in Code Sec. 416(g)(4)(H)?

It seems to me that the phrase might mean only plans including (1) a CODA meeting the requirements of Code Sec. 412(k)(12), (2) matching contributions meeting the requirements of Code Sec. 401(m)(11) and (3) nothing else.

Alternatively, it seems to me that the phrase might mean plans including (1) a CODA meeting the requirements of Code Sec. 412(k)(12), (2) matching contributions meeting the requirements of Code Sec. 401(m)(11) and (3) something else, so long as nothing is contributed under (3).

The first interpretation is related to the plan design itself, while the second is more concerned with the year-to-year operation of the plan.

Any assistance you can provide in helping me understand the phrase "a plan which consists solely of" will be greatly appreciated. Thanks.

[Tom Poje]

at the 2002 ASPA conference the IRS voiced an opinion (Q and A #21 and 33) that as long as no other contributions (besides deferrals and safe harbors) were made then the plan was deemed not top heavy.

As with any Q and A, such comments do not represent an official position, nor have they been reviewed or approved by the Service or Treasury.

Personally I think their comments are probably reliable in regards to this particular Q and A

[kocak]

My recollection is that this determination is made each plan year. So if you had a profit sharing contribution 3 years ago, you are not necessarily precluded from being "not a top heavy plan" in the current year.