Frozen Top Heavy DB Plans

[Guest LBBarr]

Hi, Under the top heavy regs, a frozen db plan must continue top heavy accruals (2%). Does this in any way prevent a frozen db plan from excluding new participants? In general is there any problem with freezing a top heavy db plan to prevent new participants from entering the plan? Thanks

[rcline46]

WIth the freeze amendment (or later with a separate amendment) you can freeze participation also. Since TH accruals are technically not benefitting, you escape the 401(a)(26) rules on minimum participation. You still need to keep up to date with all amendments, and make sure the restatement also keeps the plan frozen.

[Guest]

One possible future consideration: At such time as the plan is terminated and there are excess assets that will be re-allocated, it's my understanding that the re-allocation will constitute "benefitting", so the automatic pass of 401(a)(26) and 410(B) is negated.