Guest Henry Schneider Posted January 14, 1999 Posted January 14, 1999 When calculating a Top Heavy minimum contribution, for what period do you determine compensation? For example, if the plan document requires that you recognize compensation from a Participant's date of entry for PS allocation purposes, would you similarly limit a participant's compensation for the determination of the Top Heavy minimum contribution or would you use full year compensation? The Q&A's in the Regs under 1.416 direct you to 1.415-2(d)for the definition of copmpensation for this purpose. 1.415-2(d) merely states that you use compensation "for that plan year" and does not specify if that includes pre-participation compensation. I can find no reference to the appropriate period to use. Any help/input would be greatly appreciated.
Tom Poje Posted January 14, 1999 Posted January 14, 1999 it is 415 comp comp, which is comp for the whole year, not just date of participation. This means an ee might be better off with a top heavy minimum at 3% rather than the contribution based on comp from date of participation. I would hope most software would be able to handle this as well - provided of course, you have comp entered properly.
Guest mquincy Posted January 14, 1999 Posted January 14, 1999 Top heavy minimum allocations should be based on eligible compensation for the plan year. This would include compensation from the date of eligiblity forward regardles of the participant's entry date into the plan.
Guest art Posted January 16, 1999 Posted January 16, 1999 Tom is correct. 415 compensation is used for 416 minimums.
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