Top Heavy Testing Basics

A plan is top heavy when more than 60% of the account balances as of the “determination date” are attributable to “key” employees. A top heavy test must be performed on an annual basis for all qualified plans to determine if a plan is top heavy. Qualified plans are subject to minimum contribution and vesting requirements each year it is considered top heavy. However, certain safe harbor 401(k) plans may not be subject to the top heavy rules if it meets certain criteria.