Top Heaviness for small startups

[richard]

It appears that small (say, under 20 employees or so) companies that provides stock options to all (or most) of its employees are likely to have Top Heavy 401(k) plans. Is this correct?

What I am thinking about is that key employees include the 10 employees with the most stock, including stock options (assume they all make over $30,000). [416(i)(A)(ii)]

In a fairly small company with stock options for everyone (or nearly everyone), there will almost automatically be 10 key employees under clause (ii). There probably won't be any other key employees under (i), (iii) or(iv) since they generally will already be included under (ii).

Now, if the company only has 15-20 employees and 10 are key, isn't it almost a certainty that a 401(k) plan would be Top heavy? In that case, wouldn't 3% company contributions required for all of the non-keys, even if they don't defer?

The "key" here appears to be stock options?

What have I missed?