McKay Hochman - FAQs - Top Heavy Questions

Top Heavy FAQs

For top-heavy testing purposes, how long does a key employee remain a key employee after a severance of employment from the company? Rev. 01/11/08, E-mail Alert 2008-1

Even when using the "top-paid group election" to determine highly compensated employees, the 5% owners rule must be considered since 5% ownders may not be in the top 20% group. How can these rules be reconciled? Rev. 07/09/04 E-mail alert 2004-14

In a defined contribution plan, what amounts are included in the determination of account balances for purposes of the top-heavy calculation? Rev. 03/04/04 E-mail alert 2004-5

In 2001, a participant took an in-service distribution. In 2002, the same participant was terminated and took a full distribution in that year. Should the in-service distribution be added back in for the December 31, 2003, top-heavy determination? Rev. 02/20/04 E-mail alert 2004-4

Must a rollover be included in the top-heavy account balance determination? Rev. 11/07/03 E-mail Alert 2003-21

A company was created by a spin-off from another company on October 1, 2002. The two companies are unrelated employers. The original company maintained its 401(k) plan and the assets of the participants who were spun off were transferred to the new company’s plan. For the top-heavy test to be performed at the end of the year, may the original company include the assets distributed on October 2, 2002, as money distributed in the last 12 months in its December 31, 2002 determination date balance? Rev. Email Alert 2003-17 9/11/03

A more-than 5% owner's assets are divided by a QDRO. The affected assets are then paid to the former spouse as alternate payee. Are these assets included in the top-heavy test? And, if so, for how long? Are the affected assets treated differently if the ex-spouse chooses to leave the assets in the plan? Rev. 02/21/03 e-mail alert 2003-3

Under EGTRRA, 401(k) Matching Contributions must use a Top Heavy Vesting Schedule, what are the choices if the plan currently has a 5-year cliff vesting schedule on my matching contribution? Rev. 06/25/02

For a calendar year plan, what are the differences about the Top Heavy determination dates of 12-31-2000 and 12-31-2001? Rev. 05/17/02

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