How do you give the Top Heavy minmum contribution

[Earl]

Client has a DB Plan, has no employees, so its Top Heavy....

Hires his first employee and wants to have an immediate eligiblity 401(k) plan.

The DB plan contribution exceeds 25% of pay so how does the TH min work? the DB plan has a 2 year wait so the new employee will not be eligible until 01/01/07 so there is the 2004, 2005 & 2006 TH min to worry about.

Seems like the client has to make a non-deductible contribution and that an excise tax would apply.

Can you specify that the employee is eligible for only a TH min accrual in the DB plan for 2004, 2005 & 2006? If he quits in 2005 he has 2 years of 100% vested TH accruals in a plan he never entered?

Thanks for any ideas or information.

[Blinky the 3-eyed Fish]

Multiple postings of the same question are my new pet peeve.

[Earl]

noted.

sorry.