HCE excluded from 3% SH. Still get a TH pass?

Discussion in the office:

Key EEs have 75% of plan assets.  TH according to account balance test.

Plan has 3% SH to all.  Plan is deemed NOT to be TH by virtue of the SH rules.

What if we excluded all HCE, or only non-owner HCE from the 3% SH.  Do we still get the TH "pass" as there may be some HCE who are non-key and would otherwise get the TH contribution had the plan not been SH.

IMHO - it will not blow your top heavy exemption. Top heavy  minimums are required only for NHC. If you exclude the HC, the plan still consists only of deferrals and SH contributions, so your top heavy exemption remains intact.

I agree with the conclusion, but the statement "Top heavy  minimums are required only for NHC." should be "Top heavy  minimums are required only for non-keys, not that it makes a difference in this case."

Agreed. Even after all these years, I have a terrible tendency to sometimes use the terms interchangeably. I know what I mean, but it can sure cause problems for someone else reading it!

Although if this were a non-Safe Harbor Plan consisting only of Keys and HCEs, you would agree that the HCEs must receive Top-Heavy, correct? (Assume, for the example, Keys were maximizing PS contributions)

Isn't the magic whether or not a KEY gets or makes a contribution, king?

Non- safe harbor, I'd say yes, king.

56 minutes ago, 401king said:

Although if this were a non-Safe Harbor Plan consisting only of Keys and HCEs, you would agree that the HCEs must receive Top-Heavy, correct? (Assume, for the example, Keys were maximizing PS contributions)

If there are additional allocations for Profit Sharing beyond just deferral and allowable SH contributions, the plan is no longer deemed to the be not Top Heavy.