top heavy

[Gary]

Say a 401k plan provides:

deferrals

discretionary profit sharing

plan is top heavy and does not make profit sharing.

does plan have to provide top heavy allocation?

my understanding is that they have to provide the highest deferral (up to 3%) made by a key employee to the non keys.

also, what section of code, regs explicitly provides this requirement?

thanks

[Lou S.]

Your understanding is correct.

see, IRC §416

[PensionPro]

Elective contributions on behalf of key employees are taken into account in determining the minimum required contribution under section 416©(2).

§1.416-1. M-20