Key Employee

[Jilliandiz]

Can someone tell me the definition of a Key Employee for purposes of Top Heavy Testing.

I always confuse this in my head.

Thanks

[Belgarath]

It isn't really that simple a definition. In the most basic form, an employee who at any time during the plan year is:

1. An officer having annual comp in excess of 130,000 (adjusted);

2. A 5% owner; or

3. A 1% owner whose annual compensation exceeds 150,000.

However, when you start delving into the details of the above, including attribution, it can get a little tricky. I'd highly recommend you take a look at something like the Pension Answer Book or Sal Tripodi's Erisa Outline Book, Tax Facts, etc. which are all very helpful.