Top-heavy rules focus on benefits accumulated for key employees. They use a different classification and a different calculation from new comparability nondiscrimination testing.
What makes a plan top-heavy?
For a defined contribution plan, the basic question is whether key employees hold more than 60% of the relevant account balances at the applicable determination date, with required adjustments and aggregation. This is an account-balance test, not a comparison of this year’s salaries.
Key employees and HCEs are not interchangeable categories. An employee can be treated differently under the two definitions. A new comparability proposal should identify both classifications.
A simple balance example
| Balances counted | Amount | Share |
|---|---|---|
| Key employees | $700,000 | 70% |
| Non-key employees | $300,000 | 30% |
| Total | $1,000,000 | 100% |
The 70% key-employee share exceeds 60%. This simplified example assumes the displayed amounts are the correct balances after applicable adjustments and aggregation.
How a minimum can overlap with profit sharing
A top-heavy defined contribution plan generally owes a minimum employer contribution to eligible non-key employees, commonly 3% of compensation, subject to the statutory rules and exceptions. The obligation is not determined by whether those employees choose to defer.
| Item | Amount |
|---|---|
| 3% minimum | $1,800 |
| Employer nonelective contribution already counted | $3,000 |
| Additional amount solely for this minimum | $0 |
If the same compensation base and eligibility conditions apply, the $3,000 can already satisfy the $1,800 requirement. You generally do not add 3% on top automatically. Different eligible populations or compensation definitions can still create a shortfall.
What changes when safe harbor profit sharing is added?
Certain plans funded only with qualifying safe harbor contributions are exempt from top-heavy requirements. Additional discretionary profit sharing can remove that exemption. “We are safe harbor” is therefore not a complete answer.
Ask the provider whether the plan is top-heavy, which non-key employees require a minimum, and which contributions count. The result should reconcile with the final new comparability allocation rather than appear as an unexplained extra bill.
Explore the next step
Try the free scenario calculator with hypothetical inputs, or compare more allocation examples. The methodology guide explains what the calculator does and does not test.
Sources & further reading
Educational content updated September 18, 2026. Examples are fictional; they illustrate funding choices and do not constitute final testing or plan-specific advice.