2018 First Plan Year - Is Top Heavy

I understand that the determination date for top heavy is the last day of the first plan year (for a  new plan year).  If the plan is top heavy as of 12/31/18, the employer doesn't have to make a minimum contribution until the 2019 plan year, right?

I'm assuming you have a calendar year plan established in 2018?

For which the determination date for both the 2018 and 2019 plan year is 12/31/2018.

If your top heavy ratio is more than 60% on 12/31/18 you have a top-heavy minimum required for 2018 (which will most likely be deposited in 2019) and for 2019 which will likely be deposited in 2020.

You also may be able to  fund an employer contribution for  2018 - the initial plan year - at some point in 2019 and get the top heavy ratio under 60% (or less). By doing so, the plan may satisfy the top heavy test for both 2018 and 2019 and it can potentially be a cheaper option.

all the little details...a 2019 top heavy contribution would only be due if the keys had allocations in 2019, so there's another planning tool in your toolkit.

19 minutes ago, QP_Guy said:

all the little details...a 2019 top heavy contribution would only be due if the keys had allocations in 2019, so there's another planning tool in your toolkit.

True. The TH minimum need only be the lesser of 3% or the greatest allocation rate of any key employee. That said a 2nd year 401(k) plan where you tell the keys oh by the way none of your can contribute is not likely to be a Plan that is around for long.

And there are some instances where you might make a 2018 TH contribution to Non-Keys only which is sufficient to make the Plan not Top Heavy for 2019.