RPF - Module 5 - Unit 5: Top-Heavy
Testing- Questions & Answers
What ownership principal applies to Key Employees like HCEs? Correct Ans-Family
attribution rules
What year of compensation is used in determining a Key Employee? Correct Ans-Current
Year Compensation
What is the formula for Top-Heavy Testing? Correct Ans-Key Employee Plan Balance/Total
Plan Balance
Why are Included and Excluded Amounts important for the Top-Heavy Test? Correct Ans-The
plan's balance is the denominator in the equation for the Top Heavy Test. The plan's balance is
calculated by adding all the participants' balances. Each participant has many types of
deferrals/contributions/distributions all of which will be determined to be Included or Excluded.
What are 2 Included Amounts (distributions added back into the account balance) for the Top-
Heavy Test? Correct Ans-1) Distributions paid to participants upon termination during the
plan year
2) In-service distributions for the plan year, and the prior four years for recipients who are still
employed or have completed at least one hour of service during the plan year.
Testing- Questions & Answers
What ownership principal applies to Key Employees like HCEs? Correct Ans-Family
attribution rules
What year of compensation is used in determining a Key Employee? Correct Ans-Current
Year Compensation
What is the formula for Top-Heavy Testing? Correct Ans-Key Employee Plan Balance/Total
Plan Balance
Why are Included and Excluded Amounts important for the Top-Heavy Test? Correct Ans-The
plan's balance is the denominator in the equation for the Top Heavy Test. The plan's balance is
calculated by adding all the participants' balances. Each participant has many types of
deferrals/contributions/distributions all of which will be determined to be Included or Excluded.
What are 2 Included Amounts (distributions added back into the account balance) for the Top-
Heavy Test? Correct Ans-1) Distributions paid to participants upon termination during the
plan year
2) In-service distributions for the plan year, and the prior four years for recipients who are still
employed or have completed at least one hour of service during the plan year.
