Modifications to Top-Heavy Rules
Numerous changes to the top-heavy rules will simplify the key employee determination and testing process. It:
Modifies the definition of key employee to delete the "top 10 owner" rule and provides that an employee won't be treated as a key employee based on his/her officer status unless the employee earned more than $130,000. The law also eliminates the 4-year look back rule for identifying key employees.
Allows matching contributions to count towards satisfying the top-heavy minimum contribution requirement.
Shortens the lookback for distributions used in the top-heavy test from 5 years to 1 year except for in-service withdrawals.
Exempts plans using the 401(k)/(m) safe harbor from top-heavy rules.
Exempts frozen defined benefit plans from the minimum benefit requirement.