Profit Sharing as a Top Heavy Contrib

[Brian Gallagher]

I have a plan that is going to make the Top Heavy minimum as a Profit Sharing contribution--3% of comp for the eligibles. The person who prepared the allocation for me merely took 3% of the eligible comp. The plan is integrated w/ social security. There was no contribution listed for the ecess comp. is that correct--it's just a straight 3% even if it's integrated?

Your thought are appreciated.

[WDIK]

One of the prototype documents we have used applies a tiered approach for allocating contributions on an integrated basis.

Step 1) 3% to all eligible

Step 2) 3% of salary over TWB.

Step 3) 2.7% to all eligbile

Step 4) 2.7% of salary over TWB

Step 5) Pro-rata of any additional amounts.

Of course this would be modified slightly if the TWB is not used as the integration level.

This seems to fit in with the approach you mentioned. Of course, it will probably come down to the actual language in the plan document.

[Brian Gallagher]

Let me restate my question:

Is the Top Heavy minimum subject to the integration? Or is it just a straight 3%?

[WDIK]

If I understand your question better now, my response is that the top-heavy minimum is 3% without regard to integration.

[Brian Gallagher]

Thanks. That's what I thought. Evidently we did add 3% to the excess comp in the past, but since it was a Profit Sharing contrib, I guess it didn't really matter--TH was satisfied anyway.

[david rigby]

IRS Reg. 1.416-1. http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html

Q&A M-11

M-11 Q. May either the defined benefit minimum or the defined contribution minimum be integrated with social security?

A. No.