Do the top-heavy minimum benefit requirements apply to union employees?

The top-heavy minimum benefit requirements do not apply to union employees. This is due to specific provisions in retirement plan regulations that exempt certain plans from these requirements.

Top-heavy rules are designed to ensure that retirement plans do not disproportionately benefit key employees over non-key employees. However, plans maintained by unions or collectively bargained agreements may have different treatment. The regulations allow union plans to be exempt from top-heavy requirements, recognizing that collective bargaining may provide other forms of employee protection and benefits that are not strictly managed under the typical top-heavy standards.

This approach acknowledges that union employees typically have negotiated benefits through collective bargaining, which are distinct from standard defined contribution plan regulations. Therefore, the correct conclusion is that the minimum benefit requirements associated with top-heavy status do not extend to union employees unless there is a specific inclusion mentioned in their collective bargaining agreement, which is generally not the case. This underscores an important aspect of qualified plan administration as it relates to different employee classifications.