Top heavy contributon for a mid-year plan merger

[KJohnson]

Employer A and Employer B merge mid-year. At the same time Employer A's top heavy plan is merged into Employer B's non-top heavy plan with Employer B's Plan being the "survivor". As of the date of the merger, the resulting merged plan would be top heavy.

What is the top heavy obligation for the year of the plan merger? 1) All non-keys? 2) All of A's non-keys, but base the contriubiton of B's non-keys on comp from the date of the merger? 3) A's non-keys only? or 4) no top heavy contribution is required.

Under Q&A T-31 it is clear that all of the assets of the two plans will count toward a top heavy determination. However under 416(g)(4)©and Q&A T-22 the "determination date" is the end of the prior year (before the merger). At that point the "survivor" was not top-heavy.

Of course the Plans could have been kept separate under the 410(B) grace period and would not have had to be aggregated for top-heavy in which case the only top-heavy contribution would have been for A's employees. However, the employer decided it wanted an immdediate merger.

Any thoughts?[Edited by KJohnson on 08-25-2000 at 10:01 AM]