FAQ 200: Allocations--Top heavy minimum calculation not including the safe harbor source


I am having problems with a cross-tested plan. I have set up the plan to have a 3% safe harbor non-elective contribution in source 4, and a source 2 contribution of 2% to group 2 and group 1 getting the 415 maximum.

I have set up the plan specs so that the top-heavy minimum is reduced by both source 2 and source 4. However, when running calculations, the system is giving the employees a 3% safe harbor contribution, and a 3% source 2 contribution, for a total of 6%. It appears that the system is not using the safe harbor contribution to reduce the top-heavy obligation.

I can get the system to do the allocation the way that I would like by changing the top-heavy minimum percent in the specs to 0.00%. However, since I shouldn't have to do this, I wanted you to look at it to see if I'm doing something wrong.


As mentioned in the warning message that shows up when you run calculations, any source other than source 2 needs to be coded as "input" if it is to be used to meet the top-heavy obligation. Failure to do that can result in odd allocations like you are seeing. If you do the following, you should get the results that you are after:

1) Go to the Top Heavy Years screen in the specs and change the current plan year to "N-Never Top-Heavy" and save the specs.

2) Run calculations so that a full 3% is allocated to the safe harbor source (source 4).

3) After checking the source 4 allocation, go back to the Top Heavy Years screen and change the current plan year back to "T-Top-Heavy". Also go into the source 4 specs, change the Force Contribution field to "Yes-Use Transactions/Input by EE", and change the Contribution Fund Split field to "99-Input". This will "lock in" the source 4 contribution, so that the system can then use it to cover the top-heavy minimum.

Then if you re-run calculations, you should see the top-heavy minimum being met by source 4, and the new comp allocation being done in source 2.