Top Heavy Question

[MBCarey]

I have a plan that requires that participants work a minimum of 1,000 hours to receive a profit sharing contribuiton. There is one participant who did not work 1,000 hours and the trustee has indicated that she shouldn't receive a contribution. The plan is top heavy. Doesn't she have to receive a top heavy minimum contribution?

[Below Ground]

If Plan is Top Heavy ANY participant who is employed on the last day MUST get Top Heavy Minimum, regardless of any allocation conditions like the 1000 HoS.

[rcline46]

If she is eligible for any part of the plan, and was not terminated by end of plan year, then yes.

Also, if the plan is using compensation while a participant, make sure the PSP contribution is greater than Top Heavy based on full year pay.

[Belgarath]

And if your client is a "prove it to me" type, refer them to 1.416-1, M-10.

[Jim Chad]

MB Carey:

Note that all of the above refer to Non key employees.

[12AX7]

MB Carey:

Note that all of the above refer to Non key employees.

Some plans do have provisions requiring Key Employees to also receive a Top Heavy minimum. Please refer to the plan document.