Combo DC/DB Plan

[ERISAAPPLE]

Client has combo DB/DC plan.  For entire plan year, the DB plan is frozen.  For the same plan year, employer makes no PS or match to DC plan and no key employees make 401(k) contributions.  Only contributions for that plan year to the DC plan are non-key employee 401(k)'s.  

Both plans are top heavy.

Is any top heavy minimum due for the plan year?

 

[C. B. Zeller]

No (maybe).

In the DC plan, 1.416-1 M-7 does state that you cannot use the rule reducing the TH minimum to the maximum key contribution rate if the DC plan is being aggregated with a DB plan for coverage or nondiscrimination testing. However if your DB plan is frozen then (presumably) there were no accruals and so no testing would be required. So the plans are not being aggregated and you can reduce the DC TH minimum to 0.

On the DB plan, if no key employee benefits during a given year, then the year is not counted in determining the employee's years of service for purposes of determining the TH minimum. So if their benefit satisfied the TH minimum in the previous year, then it should still satisfy it in the current year, provided that their high 5 year average comp hasn't increased.

If the DB plan provides for TH minimum benefits under the DC plan, then I'm not sure. My feeling is that it's probably not required, since the purpose of allowing the DB TH minimum to be provided in the DC plan is to replace the minimum accrual, and if no accrual would be required for a given year then the corresponding contribution should not be required either.