Aggregation of Plans for Top Heavy Minimums (Posted August 9, 1999) Technical Tip 10: The following question and answer were from the IRS Q&A Session at the 1998 ASPPA Annual Conference: The following question was answered favorably by the IRS at the 1997 ASPPA Annual Conference and unfavorably at the 1998 Enrolled Actuaries Meeting. In this question, we are trying to walk through the relevant code sections to hopefully get the right answer (which we think is favorable). A law firm sponsors two plans: Plan A covers partners and nonattorney staff. Plan B covers associate attorneys. Under Reg. 1.4167-1;T-6, a required aggregation group for top heavy purposes consists of any plan in which a key employee participates and any plan which enables a plan in which a key employee participates to pass 401(a)(4) or 410. All key employees are covered under Plan A. Plan B covers no key employees. Plan A can pass 410 and 401(a)(4) on its own. However, Plan B cannot and needs to be aggregated with Plan A for this purpose. It is our interpretation that, under these circumstances, Plan B is not "enabling" Plan A to pass either 410 or 410(a)(4). Is our interpretation correct? If our interpretation is correct, since Plan B covers no key employees and does not enable Plan A to pass 410 or 401(a)(4), then Plan B is not part of a required aggregation group with Plan A. Plan A and Plan B, when aggregated, pass 410 and 401(a)(4). Therefore, under Reg. 1.416-1;T-7, Plan A and Plan B form a permissive aggregation group. Considered alone, Plan A is top heavy and Plan B is not. When permissively aggregated, the plans are top heavy. Under Regs. 1.416-1;T-11, when a permissive aggregation group exists, only those plans which are part of a required aggregation group must provide top heavy minimum benefits. Does it then follow that Plan B does not need to provide to heavy minimum benefits? IRS Response: Yes. We agree with your analysis. Comment by the RLR&C ERISA Attorneys: The conflicting answers given by the IRS in response to identical questions at different conferences highlights the folly of relying on statements by IRS officials. From a legal perspective, these answers are not authoritative and cannot be relied on. On the other hand, it is helpful to hear the thinking and analysis of IRS officials--but it is just the starting point for finding the answer to your question. View all Tips © 1999-2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.