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Top-Heavy Test Calculator for 401(k) and Defined Contribution Plans

What does this come to under the current IRS rules?

Key employee accounts as a share of all accounts on the determination date, with distribution add-backs, tested against 60 percent.

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  • Nothing stored or sent
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Your figures
Example figuresIllustrative only. Type over them with your own.
Key employee share of accounts
61.44%
Top-heavy above 60%
Key employee accounts plus add-backs
$1,450,000
All accounts plus add-backs
$2,360,000
Drawn to one scale
Key employee accounts plus add-backs$1,450,000
All accounts plus add-backs$2,360,000
Key employee accounts at exactly 60 percent$1,416,000
All results
MeasureResult
Key employee share of accounts61.44%
Result
Top-heavy: minimum contributions and vesting rules apply
Key employee accounts plus add-backs$1,450,000
All accounts plus add-backs$2,360,000
Key employee accounts at exactly 60 percent$1,416,000
How this was worked out
Work shownrecomputed as you type
Key share = (key employee accounts + their distributions in the look-back period) / (all accounts + all distributions in the look-back period)
Top-heavy if the key share exceeds 60% on the determination date
Look-back: 1 year, or 5 years for distributions for a reason other than severance, death or disability

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Key share = (key employee accounts + their distributions in the look-back period) / (all accounts + all distributions in the look-back period)
  • Top-heavy if the key share exceeds 60% on the determination date
  • Look-back: 1 year, or 5 years for distributions for a reason other than severance, death or disability

How it works

Under section 416(g), a defined contribution plan is top-heavy if, on the determination date, the aggregate accounts of key employees exceed 60 percent of the aggregate accounts of all employees. Account balances are increased by distributions in the 1-year period ending on the determination date, or the 5-year period for distributions made for a reason other than severance from employment, death or disability.

Leave out the accounts of anyone who has not performed services for the employer at any time during the 1-year period ending on the determination date. Plans in a required aggregation group are tested together; add their balances before entering them.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Who is a key employee?

Section 416(i)(1)(A) covers certain officers paid above an indexed amount, 5 percent owners, and 1 percent owners paid more than $150,000.

What happens if the plan is top-heavy?

Non-key participants must receive the minimum contribution in section 416(c)(2) and the plan must meet the top-heavy vesting rules.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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