adopting ER - are the owners HCE/Key?

[Santo Gold]

We had an adopting ER of a plan take effect 1/1/2011. There are two 5% owners of the adopting ER, but they have no ownership in the plan sponsor's business. Are they Key/HCE in the plan? I think the answer is yes. But, since they have no ownership in the plan sponsor, maybe not?

Thanks

[Sully]

For the ownership test, each entity within the controlled group is looked at separately. 1.416-1, T-20

Therefore, these employees would be Key/HCE. This assumes they own more than 5%.