Top heavy for year of termination in 401(k)

[Belgarath]

There are discussions of this subject, but didn't find one QUITE on point for this specific circumstance.

401(k) plan, key person has deferred more than 3%. Not a safe harbor, but there is a discretionary matching contribution. Business is ceasing operations, probably in September. Plan will be terminated. The employer does NOT want to provide a top heavy minimum. No employer match or profit sharing contribution will be made for 2019.

Seems like if they make the plan termination date as 12/31/2019 rather than in September as they originally proposed, but all employees are gone as of, say, September 15, then they fail the last day requirement and no top heavy is due. Is it that simple, or am I missing the boat? (It would be different if they made the plan termination date, say, September 15th and that is the day all employees terminated employment.)

[Doghouse]

I know this is (or was) discussed in the ERISA Outline Book, and as I recall, it was presented as a risky alternative.

[Belgarath]

Thanks, but I think that discussion was where the termination date preceded the end of the plan year. When the plan termination date is the end of the plan year, then I can't find any problem. No different than if all non-key employees are laid off in July, and then employer decides to terminate plan as of December 31. Do you think top heavy is required in that circumstance? I'm not seeing a problem. (I am talking about DC plans, not DB)

Thanks for any additional thoughts.