Top Heavy

[Jilliandiz]

Can a plan be top heavy the first year?

[WDIK]

Yes. The determination date for a new retirement plan is the last day of the first plan year.

[Guest jae3207]

Also keep in mind that if it is top heavy for the 1st year, it will also be top heavy for the next plan year.

[Tom Poje]

maybe. at one conference the IRS indicated you could include profit sharing contributions made after the end of the plan year in your top heavy determination for top heavy. thus, it is entirely possible that the contribution might kick the plan out of top heavy status.

brings back memories - many many years ago - back in the mid 80's, the very first plan I ever worked on in my life. the software got stuck in a loop trying to allocate an integrated contribution. first year of plan. it would get done, check top heavy. since it was top heavy, it redid the allocation. but now it looked at the numbers and determined it wasn't top heavy, so it went back to the original allocation. but then it said that made it top heavy so it just ran and ran and ran and I sat and watched wondering what the heck was going on.

[K-t-F]

hmmmm... Pentabs?

[Tom Poje]

you too?

[K-t-F]

I just couldnt think of a system back in the early 80s other than the PENTABS system. The Vector Research computer and the Florida Data printer. For as long as I have done this job I should be an expert... just didnt take it as serious as some.