Form 8385 PDF Details

The Form 8385, titled "Employee Benefit Plan Top-Heavy Requirements (Worksheet Number 7 — Determination of Qualification)," plays a crucial role in the realm of employee benefit plans, particularly focusing on ensuring fairness and compliance with the Internal Revenue Code. It is designed to assess whether an employee benefit plan meets the specific criteria to qualify as non-top-heavy, a classification that has significant implications for both the plan and its contributors. The form meticulously guides the user through a series of questions and checkpoints, ranging from the applicability of top-heavy provisions to the intricate details of minimum benefits and contributions that must be provided under various plan types. This form not only aids in determining the top-heavy status but also outlines the requirements for defined benefit and defined contribution plans, mandating certain minimum benefits or contributions to non-key employees. Furthermore, it includes assessments related to vesting schedules, the proper definition of compensation for purposes of determining minimums, and the operational provisions that must be in place regardless of the top-heavy status. Employers maintaining multiple plans are also required to coordinate top-heavy minimums to ensure compliance. Through Form 8385, the Internal Revenue Service seeks to ensure that employee benefit plans adhere to a structured and equitable framework, providing clear guidelines for meeting the qualifications of section 416 of the Code, thereby helping to protect the interests of non-key employees.

QuestionAnswer
Form NameForm 8385
Form Length3 pages
Fillable?No
Fillable fields0
Avg. time to fill out45 sec
Other namesf8385 2015 tax form 8385

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Employee Benefit Plan

Top-Heavy Requirements

(Worksheet Number 7 — Determination of Qualification)

Instructions—All items must be completed unless otherwise indicated. In the absence of

The technical principles reflected in this

 

 

 

 

further instructions, a “Yes” answer generally indicates a favorable conclusion is warranted

worksheet may be changed by future

 

 

 

 

while a “No” answer indicates a problem exists. Please use the space on the worksheet to

 

regulations or guidelines.

 

 

 

 

 

explain any “No” answer. Numbers in brackets refer to EDS paragraph numbers. See

Name of Plan

 

 

Publication 7002 Explanation 7, for guidance in completing this form.

 

 

 

 

 

 

 

 

 

 

 

I. Applicability of the Top-Heavy Provisions

Plan Reference

Yes No N/A

 

 

 

 

 

 

 

 

 

a. Is the plan a collectively-bargained plan and not top-heavy?

 

 

 

 

 

 

 

 

 

 

 

b. Is the plan a governmental plan as defined in section 414(d) of the Code?

 

 

 

 

 

 

 

 

 

 

 

c. Is the plan a ''Simple'' plan that satisfies section 401(k)(11) of the Code and that

 

 

 

 

 

allows no contributions other than those required under section 401(k)(11)?

 

 

 

d.Is the plan a "safe harbor" plan under section 401(k)(12) of the Code, not treated as a top heavy plan under section 416(g)(4)(H)?

(If the answer to any of these questions is “yes ”, disregard the remainder of this worksheet.)

II.Provisions Which, If Present, Will Satisfy the Requirements of Section 416

a.Does the plan contain a vesting schedule at least as favorable as three-year 100% vesting or six-year graded vesting? [707]

b.Provisions applicable only to defined benefit plans:

(i)Does the plan provide a minimum benefit for each non-key employee that consists of—

(a)The product of the employee's average compensation from the employer for the five highest consecutive years; and [710]

(b)The lesser of 20%, or 2% per year of service? [711]

(ii)Does each non-key employee obtain a minimum benefit if such non-key employee has 1,000 hours of service (or the equivalent) during an accrual computation period—

(a)Regardless of the non-key employee's level of compensation, [713]

(b)Regardless of whether a non-key employee declines to make a mandatory contribution to a plan that generally requires such contributions; and [714]

(c)Regardless of whether a non-key employee is employed on a specified date, such as the last day of the year? [715]

(iii)Does the plan preclude the forfeiture of a minimum benefit due to the withdrawal of a mandatory contribution? [716]

c.Provisions applicable only to defined contribution plans:

(1) Does the plan provide for a minimum contribution (i.e., allocation) of not less

than 3% of compensation per year, or if less than 3%, the highest rate allocated (including elective deferrals) to any key employee? [718]

Form 8385 (Rev. 3-2006) Cat. No. 62682S

www.irs.gov

Department of the Treasury-Internal Revenue Service

II. Provisions Which, If Present, Will Satisfy the Requirements of

Plan Reference

Yes No N/A

 

 

 

Section 416—Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Does the plan provide that each non-key employee will receive a minimum

 

 

 

 

 

 

contribution if the participant has not separated from service at the end of the plan

 

 

 

 

 

 

year–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Regardless of whether the non-key employee has less than 1,000 hours of

 

 

 

 

 

 

 

service (or the equivalent):[721]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Regardless of the non-key employee's level of compensation; and [722]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) Regardless of whether the non-key employee declines to make a mandatory

 

 

 

 

 

 

 

contribution to a plan that generally requires such contributions? [723]

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) Does the plan preclude the forfeiture of account balances attributable to

 

 

 

 

 

 

required minimum contributions if a non-key employee withdraws a mandatory

 

 

 

 

 

 

contribution? [724]

 

 

 

 

 

 

 

 

 

 

 

d. Is compensation to be used for purposes of determining all minimums properly

 

 

 

 

 

defined? [760 and 761]

 

 

 

 

 

 

 

 

 

 

 

e. Are the provisions described in subsections a, b, c and d operative for each year

 

 

 

 

 

of the plan regardless of whether the plan is top heavy? (If the answer is “Yes, skip the

 

 

 

 

 

remainder of this worksheet. If the answer is “No”, proceed to part III.)

 

 

 

 

III.Tests for Top-Heaviness

a.Are the following terms defined in the plan?

(1)Determination date [731]

(2)Valuation date [732]

(3)Required aggregation group [733]

(4)Permissive aggregation group [734]

(5)Top-heavy ratio [735 and 736]

(6)Key employee [763 and 764]

(7)Non-key employee [739]

b.Does the plan provide that the accrued benefits and account balances that are to be taken into account in determining top-heaviness relate to the proper determination date? [740]

c.If the plan is a defined benefit plan, does the plan specify the actuarial assumptions used to determine the present value of accrued benefits? [741]

d.Are the actuarial assumptions identical for all defined benefit plans being tested for top heaviness? [742]

e.Are proportional subsidies ignored when testing for top-heaviness in a defined benefit plan? [743]

Form 8385 (Rev. 3-2006) (Page 2)

Department of the Treasury-Internal Revenue Service

Plan Reference

Yes No N/A

f. Are non-proportional subsidies considered when testing for top-heaviness in a defined benefit plan? [744]

g. Does the plan provide that, for purposes of determining whether the plan is top-heavy, a participant's accrued benefit in a defined benefit plan will be determined under a uniform accrual method which applies in all defined benefit plans maintained by the employer or, where there is no such method, under the fractional rule? [745]

IV. Employer Maintaining Multiple Plans - Coordination of Top-Heavy

Minimums

a. Does this plan provide the minimum benefit (contribution) if it is a defined benefit (contribution) plan? [746]

b. If both defined contribution and defined benefit plans exist, does the defined benefit plan provide the defined benefit minimum or does a floor offset arrangement apply where the floor is the defined benefit minimum? [747, 748 and 749]

c. If both defined contribution and defined benefit plans exist, is the minimum contribution comparable to the minimum benefit? [747, 748 and 749]

d. If both defined contribution and defined benefit plans exist, is a minimum contribution of 5% of compensation provided for each non-key employee participating in both plans? [747, 748 and 749]

Form 8385 (Rev. 3-2006) (Page 3)

Department of the Treasury-Internal Revenue Service

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As for the blank fields of this particular PDF, here's what you should do:

1. Before anything else, while completing the Form 8385, start in the section that includes the following blanks:

Step no. 1 for submitting Form 8385

2. Right after the first section is completed, go on to enter the relevant information in all these: b Provisions applicable only to, i Does the plan provide a minimum, a The product of the employees, b The lesser of or per year of, ii Does each nonkey employee, a Regardless of the nonkey, b Regardless of whether a nonkey, c Regardless of whether a nonkey, and iii Does the plan preclude the.

Writing section 2 of Form 8385

3. Completing c Provisions applicable only to, Does the plan provide for a, and Form Rev Cat No S wwwirsgov is essential for the next step, make sure to fill them out in their entirety. Don't miss any details!

Form 8385 completion process explained (part 3)

4. Completing II Provisions Which If Present, Section Continued, Plan Reference, Yes No, Does the plan provide that each, a Regardless of whether the nonkey, b Regardless of the nonkey, c Regardless of whether the nonkey, Does the plan preclude the, d Is compensation to be used for, and e Are the provisions described in is paramount in this next part - make sure you spend some time and take a close look at each and every empty field!

Section Continued, Does the plan provide that each, and c Regardless of whether the nonkey inside Form 8385

It's easy to make a mistake while filling in your Section Continued, therefore be sure to reread it before you decide to submit it.

5. As a final point, this final subsection is what you should wrap up prior to using the form. The blank fields here are the next: e Are the provisions described in, If the answer is No proceed to, III Tests for TopHeaviness, a Are the following terms defined, Determination date, Valuation date, Required aggregation group, Permissive aggregation group, Topheavy ratio and, Key employee and, Nonkey employee, b Does the plan provide that the, and c If the plan is a defined benefit.

Form 8385 completion process detailed (step 5)

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