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Key Determination - Initial Plan Year


NW529

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A plan is effective for the first time on 8/1/2020. When determining Key status for Officers and greater than 1% owners for the initial plan year, what compensation is used? 

1/1/2020 - 12/31/2020, or 8/1/2020 - 12/31/2020?  

 

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Looking at language in a pre-approved document, it says annual 415 compensation, so I would say you need to look at the entire year, but you should check the 416 regulations for certainty.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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2 hours ago, NW529 said:

A plan is effective for the first time on 8/1/2020. When determining Key status for Officers and greater than 1% owners for the initial plan year, what compensation is used? 

1/1/2020 - 12/31/2020, or 8/1/2020 - 12/31/2020?  

 

The 1.416 Treasury Regulations require you to use 415 annual compensation-- 1/1/2020 to 12/31/2020. 

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