416-1, V-7; For additional rules regarding vesting in a top-heavy plan
, see Treasury Regulations.
Under the Act, a safe harbor 401(k) plan is automatically considered not to be top-heavy (even if it primarily benefits certain key employees) and, thus, will no longer be subject to the minimum contribution and vesting standards of top-heavy plans
3) Faster vesting is required for top-heavy plans
and for the match portion of traditional 401(k) plans.
Tax policy principles governing qualified plans are presented for defined-benefit plans, defined-contribution plans, the participation of individuals in more than one plan and top-heavy plans
Such exclusions may significantly reduce the cost of employer contributions, particularly in money purchase plans, defined benefit plans and top-heavy plans