Top-Heavy or Not Top-Heavy

[Guest 4:15 Limit]

We administer a 401(k) profit sharing plan that was effective 1/1/2008. No deferrals or employer contributions were made in 2008. We timely filed a 2008 5500 reporting $0 assets.

2009 is the second year of the plan and we need to determine if the plan is top-heavy. Is the plan not top-heavy since the key account balances as of 12/31/2008 were $0.00? Or should we (or can we) take the conservative approach and re-calculate the top-heavy ratio as of 12/31/2009 (in which case the plan will be top-heavy) and allocate the non-key employees the required top-heavy minimum since all key employees deferred > 3% in 2009?

Any thoughts would be greatly appreciated.

Thanks!

[austin3515]

I would definitely treat 2009 as the first year of the plan. There's something about a "corpus" where for a trust to really be a trust there needs to be something in it. So you probably could have skipped the 2008 5500.

Perhaps someone with more legal expertise could elaborate. I would be curious to know if I'm to something here, or just making stuff up as I go, ha ha ha...