Top Heavy 401(k) Plan

Written by True Tamplin, BSc, CEPF®

Reviewed by Editorial Team

Updated on March 09, 2023

If a 401(k) plan is top heavy, it means that 60% or more of the assets in the plan are owned by "top employees."

Top employees are those that are the most highly paid, and typically own 5% or more of their company and/or hold an officer position.

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Top Heavy 401(k) Plan Consequences

If a 401(k) plan is determined to be top heavy, then the employer must make contributions to non-key employees in order to bring the plan back into balance.

The contributions must be 3% of the employee's salary or the same as the highest contribution made to a key employee, whichever is lower.

Top Heavy 401(k) Plan FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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