Avoiding the Top-Heavy Mininum - Cash Flow Constraints

3% SHNEC Safe Harbor Plan.  Client wants to discontinue the SHNEC but a) the keys have already made substantial 401k, and b) they are top-heavy.

Can we discontinue the SHNEC as of April 30th (after providing the 30 days notice of course) and coincidentally create a short plan year ending 4/30/2025, and remain on a 4/30 plan year end for the foreseeable future?

I'll be darned if that doesn't work.  I think it does...  Otherwise he has to terminate the plan and everyone loses (because terminating is the only way to stop the top-heavy minimum). Of course all keys would be told to stop doing 401k (in fact I have made it my practice to exclude keys from the plan by design (I called it a top-heavy inoculation).

I think you can create a short plan year as of 4/30 but then you don't have a 12 month year and would be subject to ACP testing for the short year so probably refunds with "substantial 401(k) and only 4/12 of 401(a)(17) limit". The 3% SNEC should cover your TH for the 4/30 year, unless some unusual things apply, then if all Key EEs stop making any 401(k) your TH minimum would be 0% if all key allocation rate is 0%.

My understanding is there is an existential threat here, costs must be cut, and some ADP refunds is the least of anyone's concenrs.  But 100% we need to run ADP testing. 

Glad you agree!  I will propose this and if they are interested I'll probably submit this to ERISApedia Q&A service before I start doing amendments.  But thanks!!