Funding for a Projected Top Heavy Benefit

[Guest Don N]

If a plan is top heavy for a plan year do practicioners assume continued top heavy status for determining projected benefits?

[This message has been edited by Don N (edited 06-08-2000).]

[david rigby]

Depends. Usually the plan will remain in the same status, but if you know that a Key EE lump sum is "dropping off" next year, then the T-H percentage may change significantly.

However, for most plans I see, it is not significant: the *projected* benefit (which is used to determining funding) is more under the regular benefit formula than under the top heavy minimum.

[This message has been edited by pax (edited 06-08-2000).]

[Guest Don N]

Thanks Pax ; so if you weren't aware of any significant changes coming along with the employee group and the plan was top heavy, you would compare the plan's projected to a projected top heavy benefit using salary scale if appropriate and use the greater for funding costs ?

[david rigby]

Right. In most situations it will not matter because the projected benefit is more than 20% of FAC.

[Guest Don N]

Thanks pax !! My Top Heavy "bag of tricks" needed some updating !