Top Heavy and Multiple Employer

[cdavis25]

A plan is a multiple employer plan.  John Doe is a key employee for company A and company B.  Both sponsor the Plan.  John Doe defers from company A and has a balance of say 20,000.  He has never received a contribution from company B and has no balance.  What do you use for his account balance in the top heavy testing?  Do you just use his balance from contributions/earnings from company A for their top heavy test.  Then, just use his contributions/earnings from company B for their top heavy test?  i.e.  His balance in company B would be zero, so he would not have a balance in the top heavy test for B.  His balance in company A would be 20,000 and he would have a balance in their test.

[ETA Consulting LLC]

Correct.  Just be sure to properly justify the balance split between two plans.  In this case, it is easy since he has never received a contribution in the plan (deferral or otherwise) from Company B.  But, to your point, you would not use any balance attributed to contributions from one employer in the top heavy determination for the other employer when the companies are not related.

Good Luck!