Which statement about a "top heavy" qualified retirement plan is TRUE?

A "top heavy" qualified retirement plan is defined by the distribution of its assets, specifically regarding key employees. The correct statement indicates that more than 60% of the plan assets must be allocated to key employee accounts for the plan to be classified as top heavy. This classification is important because it triggers specific requirements under the Internal Revenue Code aimed at protecting the interests of non-key employees, ensuring that they receive a fair benefit from the plan.

In a top heavy plan, regulations require that non-key employees receive minimum contributions or benefits to help balance the disparities that might arise from a disproportionate allocation of assets to key employees. This ensures that the retirement benefits are equitable and that low- and moderate-wage employees are adequately protected.

The other options do not align with this definition and thus do not accurately describe the characteristics of a top heavy qualified retirement plan. For example, having less than 40% in key employee accounts or being entirely owned by non-key employees would not meet the criteria for being classified as top heavy. Additionally, the assertion that it benefits only highly compensated employees overlooks the protective measures mandated by federal regulations aimed at ensuring non-key employees also receive justified benefits.