Excluded Employee - Top Heavy

[Vlad401k]

We have a plan with 2 participants (correction: employees) 100% Owner and another employee who is an HCE (but not a Key Employee).

 

The plan excludes the HCE by name and only the Owner contributes to the plan.

 

The Plan is Top Heavy.

 

The plan passes coverage testing, since there are no NHCEs.

 

Does the plan have to fund the Top Heavy Minimum 3% to the HCE who is excluded from the Plan?

 

Thanks!

[Bri]

You say he's a participant, but you also say he's excluded from the plan by name.  Why is he being deemed a participant?  Because if he's really NOT one, then the THM would not apply.

That's different from being eligible and just not accruing anything.

[Bri]

oh, upon seeing the correction that HCE 2 is specifically not a participant, then that makes it evident he wouldn't need to get a THM.

[Jakyasar]

I thought exclusion by name was a BRF issue and not considered a reasonable classification!! I would have written as any HCE not an owner is excluded.