Top Heavy Minimum When Key Defers less than 3%

[lcollins300]

Would like to clarify that when a key defers less than 3% (say 1%) then the top heavy minimum would only be 1% correct?  I keep on getting conflicting information that it must still be 3%.  Employer is not making any other contributions except THM.

[BG5150]

If that is the ONLY Key EE deferring, you are correct.

The rules are the lesser of 3% OR the highest Key allocation %.

[lcollins300]

Thank you!

 

[Tom Poje]

that depends. maybe .  check the document.

for instance

8.     Top-Heavy Allocations

Top-Heavy allocations are made to

a.     [ X ]  This Plan.  Participants who share in Top-Heavy minimum allocations:

i.      [  ]  Non-Key only.  Any Participant who is employed by the Employer on the last day of the Plan Year and is not a Key Employee

ii.    [ X ]  All Participants.  Any Participant who is employed by the Employer on the last day of the Plan Year

 

you indicated the top-heavy was a 1% "allocation". but if  all employees receive the allocation, then it sound like the key person receives as well (his deferral doesn't sound like an allocation). but since he deferred 1% he is now at 2%. oops I just increased my top heavy.

but I haven't seen a write up on how this is supposed to be interpreted, so what do I know.

[Kac1214]

Also, be sure no forfeitures are reallocated