What requirement is specifically mentioned regarding allocation conditions for top-heavy contributions?

In the context of top-heavy contributions for a 401(k) plan, the requirement that is specifically mentioned relates to the "last day requirement." A last day requirement refers to the condition that an employee must be employed on the last day of the plan year in order to receive a contribution from the employer.

When a plan is classified as top-heavy, certain minimum contributions are mandated for non-key employees. To comply with regulations, the plan can allow for a last day requirement to determine eligibility for these contributions. This means that if the plan chooses to implement this requirement, it may specify that only those employees who are still with the company on the last day of the plan year are eligible for the top-heavy contributions.

Other choices do not correctly reflect the established requirements. For instance, stating that there can be no last day requirement would overlook the allowance for plans to incorporate such a condition. Similarly, asserting that allocation conditions are strictly prohibited or that any type of condition is permissible does not align with the regulations governing top-heavy contributions, which allow for specific requirements, such as the last day requirement, to be in place.