Suppose someone terminates employment in 2001. They were key in the year of termination due to ownership.
Are they considered key forever for top heavy testing purposes?
Any reg site?

define 'forever' (besides "strawberry fields")

EGTRRA amended things to say "Benefits not taken into account"

if ee has not employed or performed services during 1-year period ending on the determination date. it had been 5-year.

if ee quit in 2001 that sounds like he has not performed service for a number of years, so that shouldn't effect top-heavy

DeePa: No. Would you settle for a Code cite instead of a reg cite? 416(i)(1)(A).

It used to say: "The term 'key employee' means an employee who, at any time during the plan year or any of the 4 preceding plan years, is......".

Now, it says:

"The term 'key employee' means an employee who, at any time during the plan year is......".

Thank you both...I thought not, but I just went to a seminar and one of the outlines says (your status, key, non-key, former key) is fixed on date of termination. That is what was confusing me!
Any ideas why it would read like that??

I'm thinking if they were a 15% owner in 2001, and terminated in 2001, then they are not key in 2003 under the new regs. So their balance (which is still in the plan) is only backed out of the denominator not numerator. Agree?

This is a slightly different twist on the issue. An individual who is not a key employee can be somebody who was never a key employee or somebody who was at one point in the past a key employee. If the latter, then that individual is known as a "formerly key" employee.

Account balances of people who are formerly key employees employees do not count in the top-heavy test. Neither the numerator or the denominator.