I have a client with 3 plans. Plan 1 is a DB plan and covers most employees. Plan 2 is a PSP that covers many HCEs and other staff employees. No one benefits from both Plan 1 and Plan 2. Plan 3 is a 401(k) salary deferral only plan and covers all employees. The plans are top Heavy.

Employee A is a participant in Plan 1 (the DB Plan). He no longer completes 1,000 hours of service. Plan 1 would provide the minimum top Heavy benefit accrual, except however, Employee A doesn't accrue this benefit because he has less than 1,000 hours of service.

Employee A is a participant in Plan 3 (the 401(k) plan).

What Top Heavy minimum benefit does Employee A receive and from which plan. He doesn't satisfy the requirements for the DB minimum benefit, but does satisfy the requirements for the DC minimum contribution.

Any thoughts - please help.

Is he a Key or a Non-Key? You may exclude him from minimum benefits altogether (depending on plan provisions) if he is a Key. You might want to do this if, for example, cost containment of the program were a primary objective.

Thank you. He is a non-key employee.

You may get different answers on this. My recollection is that the 416 regs mention that a participant in both a TH DB and DC plan is due either the 5% DC or 2% DB (of course there are the other 2 options that I won't get into). However, the intent IMHO is that the person must satisfy the TH accrual requirements in the respective plans to accrue the TH minimum as a multiple plan participant. Therefore, in your case, the person was there on the last day, but didn't work 1,000 hours, and is due 3% from the DC plan.

So that is my statutory opinion of how the plans are allowed to be operated. Check your document to see if it states something differently.

And that 3% in the K plan is going to be a problem if the intention of having no participant be in both the DB and PSP plan is to avoid the 25% of pay 404 limit because that 3% in the K plan will cause the limit to apply.