3796. When are multiple plans top-heavy?Nuco Employeercline212014-08-17T15:03:00Z2014-08-17T15:03:00Z24402512Summit Business Media205294714 key employee2005-01-18T00:00:00ZTaxFactsDefaultArticleSite Map/Retirement Plans/Quick Clicks/Top HeavySite Map/Retirement Plans/Pension And Profit Sharing/Qualification/Top-Heavy Plan Requirements116140352-00-tf1.xml354.00;#2256;#2286;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1When is a plan top-heavy?109300.000000000TaxFactsDefaultArticle2010-01-15T00:32:05ZSBMEDIA\moss-admin3796. When are multiple plans top-heavy?Where an employer maintains more than one qualified plan, some or all of those plans will be aggregated and tested as a group for top-heaviness. Specifically, all qualified plans (including collectively-bargained plans) of an employer that cover at least one key employee (i.e., key employee plans) and any qualified plans that enable an otherwise discriminatory key employee plan to satisfy the nondiscrimination requirements of IRC Sections 401(a)(4) or 410 (Q 3739 to Q 3757, Q 3692 to Q 3709) are required to be aggregated into a single group.In addition, an employer may designate any other qualified plan or plans (including collectively-bargained plans) not required to be aggregated under the above rules to be included in an existing aggregation group, provided that the resulting group, taken as a whole, would continue to satisfy IRC Sections 401(a)(4) and 410.If an aggregation group is top-heavy, all plans required to be included in the group under the above rules will be considered top-heavy plans; any plan included in the group solely because of the employer’s designation will not be treated as top-heavy. Even though a collectively-bargained plan covering a key employee might be part of a top-heavy aggregation group because it was required to be aggregated, that collectively-bargained plan will be excepted from the faster vesting, minimum benefits, and maximum compensation requirements discussed in Q 3800.See Treas. Reg. §1.416-1, T-3. If an aggregation group is not top-heavy, no plan in the group will be considered top-heavy, even though one or more plans composing the group would be top-heavy if tested alone.Treas. Reg. §1.416-1, T-9.The procedure for testing top-heaviness of an aggregation group is the same as that discussed above for a single plan, except that the values tested are the sums of the respective present values and account balances determined for each plan, as of its determination date, composing the group. When plans composing the aggregation group have different plan years, the test is carried out using the determination dates that fall within the same calendar year.Treas. Reg. §1.416-1, T-23.If only one of the employer’s plans is a key employee plan and that plan, by itself, satisfies the nondiscrimination requirements of IRC Sections 401(a)(4) and 410, that plan will be tested as a single plan unless the employer elects to designate another plan for aggregation with the key employee plan.