2 EMPLOYEE RETIREMENT PLAN _ TOP HEAVY

[RRivera]

Hello, 

My employer retirement plan is based on two employees. The owner and an employee. However, testing resulted in the owner being top heavy at 64%. However, they are a Safe Harbor at 4% as well as the prior year. 

My question, is there any additional requirement on part of the owner on contributions? 

Thanks 

 

 

[Lou S.]

Is it only deferral and safe harbor match? If yes you are deemed to be "not top-heavy"

Additional employer contributions (with certain additional match exception), voluntary after tax contributions or forfeiture re-allocations will "blow your top-heavy exemption".

 

 

[Tom Poje]

I assume you mean basic match when you say 4%.

as noted, if there are no other contribution the plan is top heavy free.

If the one employee is not deferring, I would make sure I had a copy of a 0% deferral form on file. while you wouldn't think it would happen, a disgruntled employee could claim "No one told me I could defer and get a match. if I had known I certainly would have. how dumb do you think I am"