It has been a while since I had a top heavy plan. As of 12/31/2006, owners had greater than 60% of total plan assets, creating a 2007 top heavy plan. For 2006, the only contributions made by all participants were salary deferrals. I know the original 416 regulations said count key employee deferrals and ignore non-key employee deferrals.

Have there been any changes? So we can count non-key deferrals, for insatnce.

Jim

I do not think so.

a little bit confused on what is being asked.
at 12/31/06 you determined plan is top heavy for 2007.
now I thought the issue becomes if a key ee defers in 2007 (or receives a non elective) then the top heavy must be given.
deferrals do not count to determine if the top heavy has been satisfied. (e.g. a non key who defers in 2007 has not received a top heavy)

Tom,

The plan is top heavy as a result of the key employees having greater than 60% of the plan assets as of the determination date in 2006 (12/31). The question is if the key employees make deferrals in 2007, are they required to make top heavy contributions to the non-keys. There are no employer contributions being made.

If any key employee in your situation makes any elective deferrals for 2007, then a top heavy contribution from the employer for the non-key employees will be required.

Although it was worth nothing, it blows my mind that his hasn't been repealed. This is a burden on small employers and even larger employers that have been owned by the same person for 20 years+.

I can't understand why passing nondiscrimination on contributions each year doesn't suffice. I'm suprised there isn't more lobbying to get rid of it, but I suppose lobbying is a luxury of the fortune 500.