Top-heavy, early eligibility

[Guest John Nelson]

Employer maintains 401(k) plan. Plan is top-heavy. Employer amends plan to allow employees to participate in 401(k) arrangement (i.e., make salary deferral contributions) before having completed one year of service. Employer could most certainly exclude these employees (i.e., require one year of service), but feels "what the heck -- it's their money, let them contribute". But now, if you believe IRS, employer has to make 3% top-heavy contribution for these otherwise excludable employees. I'm troubled by this result. I think a solution is for Employer to have two plans -- Plan A, which covers employees with more than one year of service, and Plan B which covers employees (other than key employees) with less than one year. Since Plan B is not top-heavy, no minimum contribution is required for Plan B participants. But, if I can do this with two plans, why can't I do this with one plan and disaggregate the "plans" for top-heavy (just like I can disaggregate for 410(B) and (a)(4) testing)? Is anyone else out there frustrated with this? Thanks.