Affiilated Service Group (ASG) & top heavy allocation

[Jakyasar]

ASG has 3 plans.

1 plan never had a key employee and not top heavy - Plan X

The other 2 plans are top heavy and provide top heavy allocation.

Is Plan X required to be part of the aggregation and receive top heavy allocation?

[CuseFan]

Plan X is not part of the Required Aggregation Group if it is not aggregated with the other plans to satisfy coverage or nondiscrimination.

"Required Aggregation Group" means (a) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the Plan Year containing the Determination Date or any of the four preceding Plan Years (regardless of whether the Plan has terminated), and (b) any other qualified plan of the Employer which enables a plan described in (a) to meet the requirements of Code sections 401(a)(4) or 410.

Note you could permissively aggregate X with the other plans to make the group not top-heavy, if that is a possibility, but then you must satisfy both coverage and nondiscrimination within that group.

"Permissive Aggregation Group" means the Required Aggregation Group of plans, plus any other plan or plans of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code sections 401(a)(4) and 410.

[John Feldt ERPA CPC QPA]

(a) AND (b) both.

You say (a) is not met. So that plan, plan X, is not required to provide top-heavy in that plan, unless Plan X is used to help any other plans pass coverage or nondiscrimination.

Thus, if plan X covers only a nonkey HCE, you are golden. Plan X is not used to help the other plans pass coverage or nondiscrimination.