Top Heavy Minimum in DB/SHDC

[drakecohen]

Sorry if this has been covered before but I also have variations on the initial question that may be unique:

Situation: Sponsor has DB and SH DC plan. 2 NHCEs. HCE1 is sole owner and only Key, non-owner HCE2. Since no PS in DC Plan that plan is exempt from TH. DB document says any TH to be provided under the DB.

Q1: Would the TH minimum in the DB be 2%- or 3%- of pay?

Q2: If any PS contribution were to be made in the DC plan then would the answer to Q1 change?

Q3: If HCE2 were excluded from DB plan would any TH be due them under DC plan if no PS made to DC?

Q4: If HCE2 were excluded from DB plan would any TH be due them under DC plan if a PS were made to DC and would that TH to HCE2 be 3%- or 5% of pay?

[Lou S.]

HCE1/Owner is a participant in both plans, correct? That's the assumption I'm going on anyway. So DB and DC both have key participant so you have a required aggregation group so I'm not sure why the DC plan would be exempt.

Q1- DB TH minimum is always 2% accrual as far as I recall (subject to limits in 416). I seem to recall the 3% DB dealing with buying back fractions a long time ago, maybe old 415(e) related on super top heavy.

Q2 - No

Q3 - If HCE2 is excluded from DB you would need to give a TH minimum in DC plan but it could be offset by SH match if the plan allows.

Q4 - He is excluded from the DB plan and thus not a participant in the DB the DC minimum of 3% would apply.

 

The plans should spell out the method being used to satisfy TH.