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Top Heavy 5-year rule


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Posted

Under the post EGTRRA rules, we are to add back the in-service withdrawals that occured for the the determination year and the previous 4 years. This does not distinguish between Key and Non-Key, so I read this to mean you add back all in-service distributions for the period regardless of their status as key employee or non-key. Did I read this wrong? And is it still a grey area regarding ADP and ACP corrective distributions? I see where the IRS made a comment at the ASPA conference, but has there been any other clarification on this issue?

Thank you for submitting your responses.

Posted

I believe you add back regardless of HCE/NHCE status.

I also believe that ADP/ACP corrective distributions are added back to the extent they are actually distributed to the participant in question. If they are forfeited, I don't think they count as distributions to be added back.

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