top heavy contribution CB & PS

[abanky]

Top Heavy CB and a PS Plan.

Both documents say TH contribution of 5% in PS.

Employee is only eligible in CB Plan due to definition of eligibility.

Does he get 5% in the PS plan even though he wouldn't be normally eligible or 2% accrual in the CB?

[Mike Preston]

Employee is only eligible in CB Plan due to definition of eligibility.

OK, I'll bite. What does the above mean?

[mwyatt]

Well, since you're 5% in the PS only covers multiple plan situation (i.e., this is language provided when you have a participant in both the DB and DC plan, which plan will cover the minimum), and you specify that the person in question is not a participant in the DC plan, he gets the 2% accrual in the CB plan.

[John Feldt ERPA CPC QPA]

Take a really close look at the document. I'll bet the DB (CB) document language actually says that for those employees who are participants in both plans, the top heavy is provided in the DC.

Thus, as mwyatt has explained, anyone who is only eligible for the DB plan must receive at least the normal DB top heavy minimum, which is a 2% per year times 5-yr avg pay as a life annuity (max 10 years) payable at NRD.

Perhaps a more interesting question might be (to me anyway): if a participant is in the DC and the DB plan, and terminates before the last day of the plan year, but after getting 1000 hours for the plan year, where is the top heavy provided? Say the DC plan requires a last day to get the allocation. No TH allocation in the DC plan. But a DB plan can't have a last day requirement, instead, it could impose a 1000 hour requirement (which has been met). They are a participant in both plans, so the document language would indicate that the top heavy is provided in the DC, but the DC top heavy is zero since the last day rule was not met, so is zero okay as a TH minimum even though the ppt had 1000 hours and was in a DB plan during that same time?

[Guest amadeus]

J4FKBC,

I don't think you can get away with giving him -0-. The combined plan t/h regs say that the rules are intended to avoid unnecessary duplication or inappropriate omission (or something like that). In your example I think you have the latter. He's got to get something, somewhere, even if you have to craft an amendment to do it.