Key employee

[abanky]

I have a plan with 2 year eligibility.

I have a key who terminated in 2008 and worked 1000 hours. He took an immediate distributions.

He now is planning on returning in July,he will be working full time but will not be a shareholder or officer.

My questions are these

1) is he a still a key?

2) when does he reenter the plan?

Thank you,

Andrew

[BG5150]

For # 2: Check the plan document. Many times, if a person does not have "X" breaks in service and was elgiible when he left, the person is re-eligible upon rehire.

[Lou S.]

For #1 was he a key becuase he was a more than 5% owner at any time in 2008? If yes he'll be a key for 2009 but a former-key for 2010.

[Kevin C]

He will be Key for 2009 if he meets the Key definition for that plan year. Otherwise, he will be Former Key.

416(i)(1) KEY EMPLOYEE. --

416(i)(1)(A) IN GENERAL. --The term "key employee" means an employee who, at any time during the plan year, is --

416(i)(1)(A)(i) an officer of the employer having an annual compensation greater than $130,000,

416(i)(1)(A)(ii) a 5-percent owner of the employer, or

416(i)(1)(A)(iii) a 1-percent owner of the employer having an annual compensation from the employer of more than $150,000.

For purposes of clause (i), no more than 50 employees (or, if lesser, the greater of 3 or 10 percent of the employees) shall be treated as officers. In the case of plan years beginning after December 31, 2002, the $130,000 amount in clause (i) shall be adjusted at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2001, and any increase under this sentence which is not a multiple of $5,000 shall be rounded to the next lower multiple of $5,000. Such term shall not include any officer or employee of an entity referred to in section 414(d) (relating to governmental plans). For purposes of determining the number of officers taken into account under clause (i), employees described in section 414(q)(5) shall be excluded.