Combo plan - top heavy related

[Jakyasar]

401k/SH match/PS combo with CB plans. Top heavy is provided by DC plan. PS allocation is everyone in their own group. Plans are top heavy.

DC plan eligibility for all sources is age 18 and 6 months with entry 1st of month following completion of 6 months service. CB plan is 21/1 with dual entry.

Gateway is required at 7.5%.

During 2025, the TPA handling the DC plan changed the provisions unbeknownst to me:

• Removed last day and hour requirement for PS contribution
• Made top heavy requirement 5% defined contribution minimum as written in the document for combo plans.

For top heavy, must be employed on last day.

No SECURE 2.0 amendment for "no top heavy for otherwise excludable employees".

A few different questions as I confused myself (do not work with SH match in combo plans in general):

For an HCE but non-key who is excluded from CB plan categorically:

HCE made a deferral and received 4% SH match, but they do not want to allocate any profit sharing. What is the top-heavy requirement? Do I need to provide additional 5% PS allocation?

For non-HCE employees who became eligible during 2025 due to 6 months eligibility:

• Employee enters the plan during the year after 6 months of service
• Terminated before EOY
• Made deferral and received 4% match
• Not in CB due to 1 year wait

Do I need to provide 5% top-heavy PS allocation?

How about for the same employee who was employes at EOY?

I so confused myself here as I have not seen a document written this way.

Thank you

[Bri]

Well, is your SECURE 2.0 amendment going to operationally reflect the no THMs for otherwise excludables?

If not, then you'll want to review exactly how that 5% is spelled out.  Is it 5 because the document says everyone gets 5, or is it because the plan says anyone who needs to get 5 will get 5?  That first HCE in theory should only need a 3% THM, already covered by the match they got.  But the document might have been written to force the 5 upon the guy.

Kinda would need to see more of how much the THM is written as an override to the other provisions.

[Jakyasar]

SECURE is not in place for 2025 so no otherwise excludable exemption for 2025.

As for the language (thanks for making me re-read the section with my lips moving), here is the language. I do not have BPD though.

"Top-heavy duplications when a defined benefit plan is maintained (Plan Section 4.3(i)). When a Non-Key Employee is a Participant in this Plan for a Plan Year and also accrues a benefit for the same Plan Year in a defined benefit plan maintained by the Employer that is subject to the top-heavy rules, indicate which method will be utilized to avoid duplication of top-heavy minimum benefits: (select one of a. - d. AND complete e. or select f.)
a. [ ] The full top-heavy minimum will be provided in each plan (if selected, Plan Section 4.3(i) will not
apply).
b. [X] 5% defined contribution minimum"

Looks like 3% it is as excluded from the CB plan i.e. not benefitting, did I get this right?

If I did then the 4% SH covers it.

Question, what if the SH match was only 1%? Would the PS be 2% or 3% as SH match (unlike non-elective SH) does not cover part of top heavy.

[Bri]

That sounds right, they get 5 if they have to, but in this case the guy isn't subject to duplication of THM benefits.

And yes, the PS would have been "the rest" of the THM.  I have a combo client where one HCE gets a 4% SHM and therefore only a 1% PS to get her all the way to five.

[John Feldt ERPA CPC QPA]

On 5/8/2026 at 9:36 AM, Jakyasar said:

SECURE is not in place for 2025 so no otherwise excludable exemption for 2025.

Isn’t the good-faith interim amendment due 12/31/2026 for the language that brings in the exception for top heavy for OEEs? And the plan merely operationally complies with whatever language they will adopt until then? If so, I would believe the amendment can retroactively state how the plan operated regarding this new exclusion and say OEEs aren’t entitled to any DC-only plan top-heavy minimums starting 1/1/24. If so, and someone is not accruing a DB benefit and they are an OEE, then their top-heavy minimum is zero in 2024, 2025, and 2026 assuming that is the language that they adopt by the end of this year. 

[Jakyasar]

I am not sure removing a possible benefit (assuming that I am making sense here) is something I want to tinker with even if the interim amendment deadline is EOY in 2026. Not clear how it would affect 411d6. I am playing this a bit on the cautious side, may be too paranoid.