Harrison Company just received notice from the Internal Revenue Service that there is a problem with its retirement plan.Because over 60 percent of the benefits are designated for highly compensated employees,a special set of rules apply.These rules require more rapid vesting for non-highly compensated employees and certain minimum benefits for non-highly compensated employees.What name is given to such plans?

Question

Quizplus · Accepted Answer

The special set of rules described in the question are required for top-heavy plans. Top-heavy plans are retirement plans where over 60 percent of the benefits are designated for highly compensated employees. These plans have additional requirements to ensure that non-highly compensated employees receive certain minimum benefits and more rapid vesting.

Harrison Company Just Received Notice from the Internal Revenue Service