Tefra Top Heavy Rules Sample Clauses

The TEFRA Top-Heavy Rules clause defines requirements for retirement plans that become 'top-heavy,' meaning a significant portion of benefits or account balances are held by key employees. In practice, if a plan is determined to be top-heavy, the employer must provide minimum benefits or contributions to non-key employees and may need to adjust vesting schedules to comply with federal regulations. This clause ensures the plan remains fair and compliant with IRS rules, preventing disproportionate benefits for key employees and protecting the interests of all participants.