The top heavy rules allow an employer to elect to perform top heavy testing by combining multiple plans if certain conditions are met. If an employer has both a union plan and a non-union plan, under certain circumstances, the plans may be permissively aggregated for top-heavy testing if the union and non-union plans provide comparable benefits.
The top heavy testing rules provide that some plans must be tested together when performing the top heavy test. The plans that are required to be tested together are called the required aggregation group. In general, all plans that cover a key employee must be part of the required aggregation group for top heavy resting. If an employer sponsors both a union plan and a non-union plan, and if there is a key employee in the union plan, the union plan is part of the required aggregation group with the non-union plan.
If a plan covers both union and non-union employees, there is no concept of disaggregation for top-heavy testing. Therefore, the plan is not split into a union group and non-union group to perform the top heavy test. However, the plan document may provide that union employees do not receive the top-heavy minimum benefit. See IRC 416(i).