Just took over a top-heavy plan, but no TH Employer contributions sinc

[Hoard1]

Just took over a Plan that has been TH since 1996 and there has been no Employer contributions. Is CAP the only method of correction available?

[Guest svatty]

The appropriate correction for this would be a VCR submission ... you would be permitted to use the SVP corrections contained in Appendix A of Rev. Proc. 2000-16.

[Hoard1]

Thanks. I thought I heard Sal Trapolli on an ASPA tape say (I'll relisten to the Tape) that for certain corrections, you only have to provide contributions to employees who are currently employeed. I wonder if this is one of the instances? I don't see any adjustment for interest on these contributions in the Notice. Am I missing something?

[Hoard1]

Did see the interest & forfeiture caculation in Section 3. Appendix C states you can only have 2 SVP failures. In my fact circumstances I have TH failures in 96, 97,98 & 99 (tax form filed but may be able to correct currently). Is this one SVP failure or 3 or 4?

[Hoard1]

401(k) Plan w/ match. My comment about no employer contribution were that there were no Top Heavy Contributions made. Key Employyees have made deferrals in excess of 3% of eligible payroll.

[imchipbrown]

What kind of Plan is this? You say there've been no Employer Contributions. If no key employee received any contributions (or made no deferrals under 401(k)), no contributions would be required.