Funding and Top Heavy

[LIBOR]

I have a DB plan which is currently just barely top heavy ( i.e 62%) - it wasn't TH last year but was the year before - under the current plan formula, non-keys will get at most 12% of final average pay after 30 years of service - a far cry from the 20% TH minimum required after only 10 years of service.

A Question/Poll for Other Practitioners : For funding would you assume continued top heavy status and fund for 20% of pay for those non-keys expected to have at least 10 years of service at NRD ?

PS: This is one of those "Doctor Plans" for those practitioners who go back a few years and is general tested each year - it passes (a)(4) due to the large build-up in a sister DC for the non-keys/non-hces --------- under this DB plan the Docs get 60% of FAE after 30 years.

[SoCalActuary]

The actuary makes a reasonable decision, based on judgement and evidence, on the funding assumptions. Future top-heavy status in your case is an example of such a funding assumption. Weigh the potential for future participants.

A couple of questions might help.

1. The large DC contributions allow the plans to pass 401(a)(4). Do you also consider them for the top-heavy test? If so, is it mandatory aggregation or permissive?

2. Does the Key employee participate in the DC plan? If so, it is mandatory aggregation.

[david rigby]

3. Does the DC plan already provide a contribution that meets the TH minimum?

4. Does the DC plan observe the TH vesting schedule?