cont. to eligible key employee who worked less than 500 hours in top heavy plan

[Lori H]

is it correct to not provide a 3% TH cont to a key employee who is eligible, but who failed to work more than 500 hours during the plan year? plan is standardized protoype and requires 500 hours to receive contribution.

[Blinky the 3-eyed Fish]

The answers are in your document. Is there a regular nonelective contribution being made? Are you sure the standardized document doesn't give contributions to those that work 500 hours OR are employed on the last day of the plan year? Are the allocation requirements only for the regular nonelective contribution or for the top heavy as well? It is possible that the right to receive a TH allocation is still just employed on the last day no matter the hours worked? Does the document only give the TH minimum to non-keys or are keys getting it also?

Seek and ye shall find.

[WDIK]

Seek and ye shall find.

Perhaps the poster was hoping to rely on the first part of that quotation:

"Ask, and it shall be given you;"

[Lori H]

the document makes no mention of top heavy contributions to key employees. it is a mass mutual(corbel) proto. if non keys work 500+ hours they receive full integrated contribution. this is strictly a profit sharing plan. if they work less than 500 and have met eligiblity they get the 3% regardless of employment on the last day. i would guess that if the document makes no mention of key employees pertaining to TH minimum, then no TH for that key ee who worked 400 hours.

[david rigby]

The document will specify who gets a TH contribution, probably using a term such as "non-Key employee" or "all participants". If it uses the former, providing a TH minimum to a Key EE would seem to violate the plan provisions.

[Tom Poje]

the plan in question was described as a 'standardized prototype'

if my memory serves me correctly

it is impossible to exclude anybody in any way shape form desire etc from such a beast. once you are in the plan you get get get get and continue to get

[WDIK]

Tom,

Are you thinking of the general allocation requirements, i.e. 501 hours or employed on the last day of the plan year?

I'm pretty sure that standardized prototype documents can elect to exclude key employees from receiving top-heavy contributions.

[Belgarath]

A document can exclude key employees from receiving top heavy. BUT, if it does not, then you cannot exclude an employee who has satisfied initial plan eligibility requirements who is employed on the last day of the plan year, regardless of hours. See 1.416-1, M-10.

[Tom Poje]

wdik:

you are correct a plan need only give top-heavy to non keys.

the premise in the opening statement of the thread makes no sense.

"plan is standardized protoype and requires 500 hours to receive contribution"

if plan is standardized, then there can be no hours requirement for active people. the 500 hours can only apply to terminees, so the person in question would have to receive the full contribution. I think it is a misreading of what the hours requirement in the document.

now, I suppose if it was a 401k and only top heavy was provided (no other ps) the key ee wouldn't get.

[WDIK]

1) A plan need only give top-heavy to non keys.

2) The premise in the opening statement of the thread makes no sense.

3) If plan is standardized, then there can be no hours requirement for active people.

4) I suppose if it was a 401k and only top heavy was provided (no other ps) the key ee wouldn't get.

I am in total agreement with you on these four points.

I may have misunderstood your post, as I was commenting with respect to the original post asking about 3% top-heavy contribution for key employees.

[R. Butler]

Regardless of the prototype issue, I didn't think you could have an hours requirement to receive a top-heavy minimum.

1.416-1, M-10 states that "Those non-key employees who are participants in a top-heavy defined contribution plan who have not separated from service by the end

of the plan year must receive the defined contribution minimum."

Obviously I'm only guessing, but the document is probably pretty clear on this. The document probably contain minimum accrual requirements that pertain to either Non-keys or to Participants. If the document says top-heavy minimum for non-keys than a key employee isn't required to get the contrib. (although be careful if there are other profit sharing contributions, as Tom Poje points out there isn't an hours requirement for active participants in a standard prototype document). If the document says top-heavy to participants, then he should get it.