Top heavy contributions for new EEs

[Guest PAUL DUGAN]

Over the past couple of years we have amended 401(k) profit sharing plans to allow immediate entry for 401(k) and matching contributions but require a 1 year wait to participate in the Profit Sharing portion of the plan. Most of the plans have been large so there was no top heavy questions. However I now have a couple of small top heavy plans that want to use the immediate entry for the 401(k) and match portion but do not like the idea of qiving these short service EEs top heavy minimums.

Can we exclude them like we do for ADP/ACP testing.

I can find nothing in the 416 regs.

[rcline46]

Rumor has it that if you put in the doc that TH is only for those who have satisfied the 21 / 1 YOS rules, the IRS will approve it. I have not done so yet. Make sure you disclose in application for LOD.

Otherwise, if in plan, MUST get TH contribution, and don't forget it is for full year pay, not pay while a participant!!!!!

[Guest]

interesting rumor, I haven't heard it.

is someone getting that confused with the the safe harbor non elective contribution, which you can exclude 1 yr age 21 people???

[rcline46]

Nope. Some left coast guy at ASPA said he had it approved. Reputable guy too.

[Richard Anderson]

I heard this also (but not at ASPA), guy said he had d letters on several plans with the language.