Top Heavy DB/DC

[Dougsbpc]

An employer has a top heavy DB plan that covers 15 employees and has had it for 10 years.

They will continue the DB but want to adopt a 401(k) plan for next year. The 401(k) plan will only cover 5 employees (3 NHCE's and 2 HCE's). Those same 5 employees (all non-key) would be excluded from future participation in the DB plan.

Assume they will pass 401(a)(4) and 410(b).

The employer would like to provide 3% contributions to the 2 HCE's and 7.5% contributions to the 3 NHCE's in the 401(k) plan.

Since we have a top heavy group, a 5% of salary top heavy minimum contribution would normally be contributed to the 401(k) plan.

Question: The employer wants to make the 7.5% contribution to the NHCE's and would have to anyway to meet the gateway. Do they need to provide 5% of salary top heavy minimums to the 2 HCEs or could they provide 3%? Clearly, the 2 HCE's will not be participating in the DB going forward. The question is does a 5% top heavy minimum need to be provided to the HCE's because they are "beneficiaries" of the DB plan?

[Blinky the 3-eyed Fish]

3% is sufficient because of their removal from DB participation.