Top Heavy

[Guest yarpstel]

For Top Heavy Calculation for 11/30/2002, should the $30,000 receivable contribution for 11/30/2001, which was deposited on 4/16/2003, be included?

The contribution was included in the 11/30/2001 valuation and 2001 Form 5500. There was no contribution for PYE 11/30/2002.

[Tom Poje]

if the contribution was required (DB or money purchase,etc) then you would include the receivable.

In the case of profit sharing contributions, generally the amount of 'receivable' is not included. At the ASPA conference last year, the IRS indicated it did not have a problem if the amount was included. Comments from such meetings do not necessarily reflect the actual position of the Treasury. This particular comment was a big change from the way things have been done in the past. Most, if not all people, have been told never to include such amounts. There are various old thread that address this issue.

[jaemmons]

The regulations are pretty clear as to what contributions are required Unless the plan is not in the first plan year or subject to minimum funding requirements, receivables are not included on the determination date.

1.416-1 Q&A

T-24 Q. How is the present value of an accrued benefit determined in

a defined contribution plan?

A. The present value of accrued benefits as of the determination

date for any individual is the sum of (a) the account balance as of the

most recent valuation date occurring within a 12-month period ending on

the determination date, and (b) an adjustment for contributions due as

of the determination date. In the case of a plan not subject to the

minimum funding requirements of section 412, the adjustment in (b) is

generally the amount of any contributions actually made after the

valuation date but on or before the determination date. However, in the

first plan year of the plan, the adjustment in (b) should also reflect

the amount of any contributions made after the determination date that

are allocated as of a date in that first plan year. In the case of a

plan that is subject to the minimum funding requirements, the account

balance in (a) should include contributions that would be allocated as

of a date not later than the determination date, even though those

amounts are not yet required to be contributed. Thus, the account

balance will include contributions waived in prior years as reflected in

the adjusted account balance and contributions not paid that resulted in

a funding deficiency. The adjusted account balance is described in Rev.

Rul. 78-223, 1978-1 C.B. 125. Also, the adjustment in (b) should reflect

the amount of any contribution actually made (or due to be made) after

the valuation date but before the expiration of the extended payment

period in section 412©(10).