Top Heavy Safe Harbor Non Elective Plan

[KevinMc]

A Dental office has a safe harbor non elective plan where they do a 3% contribution for the safe harbor and then a 6% profit sharing plan contribution in addition to any salary deferrals plan participants make. The plan is top heavy in that the only key employee (dentist) account for about 75% of the assets in the plan. The eligibility for any contribution is 1 year. You must be working on the last day of the plan year to receive the profit sharing contribution. The plan had two people terminate and 2 new employees during 2012 (not eligible yet). Must a "top heavy" contribution of 3% be made for the 2 new employees because the plan is top heavy??

[Lou S.]

The 3% safe-harbor has to be made to the terminated employees because you can't have hours or last day on the SH piece.

The new employees are not eligible so they are not participants and get no contribution, unless you have split eligibility that lets them in for 401(k) which would also make them eligble for top-heavy.

[KevinMc]

thanks