Top-Heavy GPT-Top-Heavy Plan Testing

Example

Top-Heavy GPT assists in explaining the steps to conduct the top-heavy test, such as identifying key employees, calculating the ratio of key employee account balances to total account balances, and determining if the plan is top-heavy.

Scenario

A business owner needs to conduct a top-heavy test to ensure compliance with IRS regulations. Top-Heavy GPT guides the owner through the process, explaining how to obtain the necessary data and calculate the ratio.

Example

Top-Heavy GPT helps users understand the compliance requirements if a plan is determined to be top-heavy, including minimum contributions for non-key employees and vesting schedules.

Scenario

An HR manager is responsible for ensuring the 401(k) plan complies with IRS rules. Top-Heavy GPT explains the necessary actions if the plan is top-heavy, such as making 3% contributions to non-key employees and adhering to vesting rules【9†source】.

Example

Top-Heavy GPT provides insights into strategies to avoid top-heavy status, such as implementing a Safe Harbor 401(k) plan, encouraging employee participation, and regularly monitoring plan assets.

Scenario

A small business wants to avoid the risk of becoming top-heavy. Top-Heavy GPT suggests adopting a Safe Harbor plan, implementing a QACA, or restructuring contribution limits to reduce the concentration of plan assets among key employees【10†source】.