Top Heavy 401k Plan

[DP]

I have a 401k plan that consists of deferrals and employer match only. The plan became top heavy during FYE 5/31/00. Does the employer have to make a 3% non-elective contribution to all eligible employees for the 5/31/01 plan year?

If the plan adopts a Safe-Harbor formula for FYE 5/31/01, can this 3% top heavy contribution also be used to safisfy the 3% Safe-Harbor non-elective contribution?

[Guest rhp]

The 3% non-elective safe harbor can be counted for the top heavy minimum. [Notice 98-52, VIII, C.1] If the plan is top heavy, a top heavy minimum is required based on any allocation to the accounts of the key employees.

[M R Bernardin]

You are too late to be a safe harbor plan for p/y/e 5/31/01, since a safe harbor notice would have needed to be distributed by approximately 5/1/00.

[Guest RJM]

Yes, a 3% minimum is required for PYE 5/01.

If the Safe Harbor isn't available and If ADP/ACP help is needed, amend with a 3% QNEC (but you must use Current Year Testing Method). If ADP/ACP help isn't needed, follow plan defined solution.

[This message has been edited by RJM (edited 06-20-2000).]