Defining Key Employees in 2002

[Guest GMedley]

We have a plan that has traditionally been top heavy. In 2001, the president of the company, who had always been considered a key employee, terminated employement. His 2001 compensation was under $130,000. It is a calendar year plan. It seems to me that he would not be considered a key employee in the top heavy determination for the 2002 plan year, as he doesn't meet any of the three definitions during the determination year ending 12/31/2001. My colleagues & I have some reservations though, as he was a key employee in 2001. I think I remember reading about "ex-key employees" somewhere. Can anyone else give me a second opinion here?

thanks

Grant

[Tom Poje]

if he was a 5% owner any time during 2001 he is still key.

if he was only key because he was an officer then he becomes former key, and you exclude him entirely from the test.

[stephen]

I expect there will be lots of "former key" employees for the 2001 determination year. Be prepared to exclude the from the test.