Top Heavy Minimum in Terminating Plan

[drakecohen]

Assume two participants: one key and one non-key. The non-key however is an HCE so ADP testing is not an issue.

The plan went top-heavy for 2014 and the key employee wants to terminate the plan effective 4/30/14

No safe-harbor provision and the key employee has already made $5,000 in 401(k) deferrals on a salary of $50,000 for 2014.

Questions:

1) Assuming the non-key employee will still be employed as of 4/30/14 is a top-heavy minimum of 3% of their 1/1/14 - 4/30/14 salary due to them?

2) If so, to avoid paying any top-heavy minimum is there any way the key employee can take back his $5,000 401(k) deferral for 2014?

[PensionPro]

yes and no in that order