1st Year safe harbor plan and Top Heavy

[Lori H]

Calendar year 2009 was a plans first year. I understand the Safe Harbor match satisfies the Top Heavy requirement, but what about the plans first year of existence and a integrated profit sharing contribution....generally if a plan is Top Heavy, you have a Top Heavy p.s formula. How is TH determined in the plans initial year or does it not apply since it is safe harbor and you just use the Non-TH profit sharing integrated formula.

Thanks

[austin3515]

If as of the last day of the plan year the plan is top-heavy, AND you do profit sharing for the first plan year, than the top-heavy minimums are due. SH only makes you exempt from thm's if the plan solely cosnsits of 401k and SH contributions. As soon as you do ps, the plan cosnsits of something other than SH and 401k, and the top heavy minimums are due.

Of course, the SH Match would count towards the thm that would be due.

[BG5150]

SH only makes you exempt from thm's if the plan solely cosnsits of 401k and SH contributions. As soon as you do ps, the plan cosnsits of something other than SH and 401k, and the top heavy minimums are due.

Isn't this true only for the years I do contributions other than deferrals and SH? For example, if I made a PS in 2007, I don't lose the SH protection for '09 if I only make the SH match.

(Don't forget, if you reallocate forfs, you lost the SH 'free pass' on TH)

[austin3515]

Yes, it is a year-to-year thing. I meant you lose top-heavy exemption just for that plan year.

[Lori H]

Ok, so any plan year they fund a PS or reallocate forfeitures, you have to check for TH basically and allocate accordingly?

[austin3515]

Yup