Owner-Employees: Does attribution apply?

[Guest admcjm]

In determining who is an "Owner-Employee" (not a 5% owner), does ownership attribution of Section 318 apply? Please provide any appropriate documentation.

Attribution clearly applies in determining who is a 5% owner, Highly Compensated employee and Key employee, but an Owner-Employee is a completely distinct classification and I do not see any evidence that says that attribution applies in determining who an owner-employee is.

Thank you.

[Blinky the 3-eyed Fish]

For what purpose are you attempting to define "owner-employee"?

[Guest admcjm]

It's for a plan that specifically excludes "owner-employees" from participation. The father is an owner-employee, but is his partial ownership of the company attributed to his son, making his son an owner-employee and therefore, ineligible to participate in the plan?

[jquazza]

Without a clear definition of owner-employee in the doc, that provision would be subject to the plan administrator's interpretation. It might be advisable to define that term in the doc (e.g. owner-employee is a direct owner of x% of the outstanding stock etc...)

[Guest admcjm]

The plan doc defines owner-employee as "a sole proprietor or a partner owning more than 10% of either the capital or profits interest of the partnership."

[Blinky the 3-eyed Fish]

Is that definition clear to you? If not, as jquazza said, you need to interpret it and you may want to consider adopting an amendment that clarifies its meaning so you don't have these questions.

How was it interpreted in the past? Your interpretation should probably be in line with past operations.