WebA defined contribution plan is top-heavy if the total of the accounts of the key employees under the plan exceeds 60% of the total of the accounts of all employees under the plan [IRC §416 (g) (1) (A) (ii)]. Top-heavy plans must meet … Web20. jan 2024 · The top-heavy test helps ensure that key employees’ accounts do not contain a disproportionate share of overall plan assets. Failing these tests can result in certain employees having to remove deferrals or in employers having to make additional—and at times substantial—contributions.
Tactics to Avoid Failing Nondiscrimination Testing - PLANSPONSOR
WebThe Top Heavy test measures the balances of “key employees” vs non-key employees, which are determined in a similar way to how HCEs are determined and described here. 401 (k) Testing basics and overview Compliance and annual filings Contributions Employers Contact Support Web16. feb 2024 · The study also found that 12% of 401(k) plans without automatic enrollment failed top-heavy testing, compared with 3% of plans with auto-enrollment; among safe harbor 401(k) plans without automatic enrollment, there was a 57% failure rate for top-heavy testing, and for safe harbor plans with auto-enrollment, 40% of plans failed top-heavy … delivery permit cebu city
401(k) Nondiscrimination Tests: How to Stay Compliant - Guideline
Web18. okt 2024 · What is the top-heavy test? The top-heavy test ensures that qualified retirement plan (QRP) participants identified as “key employees” do not receive a … The goal of top-heavy testing is to ensure that if “key employees” hold more than 60% of the total account balances by value in a 401(k) plan, that non-key employees receive a minimum contribution under the plan. Key employees are defined as: 1. An officer making more than $215,000 for 2024 (or $200,000 for … Zobraziť viac Top-heavy testing assesses account balances of key employees as a percentage of the total plan assets. A plan is “top-heavy” if the account balances of key … Zobraziť viac If you received a warning that your plan may be at risk of being top-heavy, you should first ensure that Guideline has the correct information on file regarding … Zobraziť viac If your plan is still considered top-heavy by the determination date, you must make a contribution to all non-key employees who are employed on the last … Zobraziť viac The top-heavy test can work in surprising ways depending on the facts of your plan. A few special cases are outlined below. Special case 1: Only key … Zobraziť viac WebTop-Heavy Testing "Highly Compensated Employee" Definition Multiple Plan Coordination Fiduciary Responsibility Vendor Fee Disclosures Participant Fee Disclosures General Design Options Side-by-Side Plans—Minimal Integration of Features Match in the ESOP Safe Harbor Contributions in the ESOP KSOP Design Considerations in Designing the Second Plan delivery percentage and volume analysis