The owner of a company with a defined benefit plan calls you because they had just been informed the defined benefit plan had become top-heavy. What is one practical significance of a defined benefit plan being top-heavy? Group of answer choices One of two accelerated vesting schedules must be used. Different coverage requirements and nondiscrimination tests apply. Different eligibility requirements come into effect. One of two maximum contribution and benefit formulas must be used.
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Step 1
Step 1: Identify that “top-heavy” means a disproportionate share of plan value is allocated to key (high-compensation) employees, triggering special rules. Show more…
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