11.4 Top-heavy Plans

• Library: A Lawyer's Guide to Estate Planning: Fundamentals for the Legal Practitioner (ABA) (2018 Ed.)

11.4 Top-Heavy Plans

Even though a plan meets all of the requirements to be qualified under the Internal Revenue Code, it may still be termed top-heavy, which brings to bear another set of rules. A top-heavy plan is one in which more than 60% of the aggregated accumulated benefits or account balances of the plan participants accrue to the benefit of the "key employees." A key employee is one who during the current plan year and the four prior years is (1) an officer of the employer having compensation exceeding $175,000 in 2018, subject to cost of living adjustments; (2) a 5% or...