Top Heavy

[Guest elang]

We have a multiple employer plan where the employees from a division of one of the adopting companies are excluded. The Plan just became Top Heavy as of 12/31/11. Is the excluded group entitled to a Top Heavy Contribution in 2012?

Thanks in advance for your help.

[Jim Chad]

FWIW If they are able to defer, than, yes. Otherwise I think not.

[Tom Poje]

1.416-1 M-10

Which employees must receive the DC minimum?

Those non-key employees who are participants...who have not separated from service by the end of the plan year...

...those excluded from particpation because the comp is less than a stated amount or

those excluded because they fail to make mandatory contributions

or those excluded from the plan because they fail to defer (this is different than a plan which allows them to particpate but they don't defer, I've never heard of plan excludeding people because they won't defer), must receive top-heavy.

so if they are excluded from the plan, they are not participants.

[abanky]

Further Question... if the participant is an excluded group for employer discretionary contribution (because of location), but eligible to make deferrals, do they get top heavy? and does the particpant then get thrown into the gateway calculation?

[BG5150]

^ I would say yes to both. Unless the participant is not employed on the last day of the year, and the plan says people not employed on the last day of the year do not get top heavy.