Is it true or false that all top-heavy determinations are based on data from the determination period, typically the plan year containing the determination date?

The assertion is true because top-heavy determinations indeed rely on data from the specific determination period, which usually corresponds to the plan year that includes the determination date. This period is critical because it captures the necessary participant compensation and account balance information to assess whether the plan is top-heavy, meaning that a disproportionate share of benefits is allocated to key employees compared to non-key employees.

In evaluating whether a plan is top-heavy, the balances of the key employees’ accounts are summed and compared to the overall plan assets, ensuring that the plan meets specific requirements designed to protect non-key employees. Therefore, the top-heavy determination is fundamentally tied to the data collected during that designated annual period, making accurate reporting during this time essential for compliance with IRS regulations.

Other options suggest complications or exceptions that do not apply universally, as the determination process is standardized across all employee classifications within the context of a plan year.