Adding a DB plan for 2021 to an existing PS plan

Hi

Sponsor has an existing PS plan. Now wants to add a DB plan for 2021. DB plan, by design will state that the PS plan will provide top heavy. However,

PS plan has no provisions on how the "top heavy duplications when a DB plan is maintained" checked. In general, depending on the document type, I would put in a very detailed language explaining how the top heavy will be satisfied under the PS plan.

For 2021, DB plan is on the hook for top heavy? There is no way to retroactively amend the PS plan for 2021, correct? I just cannot think of a way out of this.

Any thoughts?

Thank you

I want to add another scenario to this out of curiosity.

Assume existing 401k plan, only has deferral and safe harbor match, no PS provisions and/or top heavy duplication provisions. Automatically passes top heavy.

Now, let's start a DB and a PS plan for 2021 today.

DB will say top heavy is provided by PS and PS will say all top heavy is satisfied under the PS plan.

So, 401k will have deferrals+SH match only, PS will have all top heavy/gateway and DB will have whatever benefits (some at meaningful benefit levels)

Any comments on this as well?

Thank you

I don't think you have a problem if the new DB Plan saying T-H minimum will be make in PS. The PS T-H minimum is 3% and you are going to give more than that, presumably 5% (and maybe more with gateway). I mean I'd amend the PS plan to conform going forward but I don't think it it would violate the plan rules. However, I don't think it is some thing that has definite guidance from the IRS so what I think is a common sense solution may not agree with the IRS views.

I'd have to give some more thought to the second but if safe-harbor 401(k) has to be aggregated with the other plans i think you lose your deemed not top heavy or as I like to call it your "get out of top heavy free card".

Lou, to your response for the second part, wouldn't the PS portion cover the top heavy?