Top Heavy Safe Harbor 401(k) Plan with different eligibilty requirements

[Guest vqualplan]

The plan has 3 months eligibility for deferrals and 1 year for the safe harbor match. The plan consists soley of deferrals and safe harbor match. The plan is top heavy, is it deemed not to be top heavy since it has the safe harbor match, or would top heavy minimums be required for the new hires that aren't eligible for the match?

What about the ADP testing. would you have to test the new hires ie the otherwise excludables. Not a big issue since HCE's are rarely in theis group.

Thanks!

[Tom Poje]

if plan uses otherwise excludable option, then the free ride on top heavy does not exist. My understanding is that all ees must receive top heavy - not just the otherwise excludable.

match can be used to satisfy top heavy.

you are correct, you would have to perform an ADP test for the otherwise excludables.

you are correct, rarely would you expect to find an HCE in the group.

personally I don't think the option for treating all HCEs as includable would be available as you are treating those people as otherwise excludable for purposes of the match. I think one has to be consistent.