Top Heavy - Officer as Key

[rcline46]

This is where I get to say I am sooooooo ooolllddd that I remember things that never were, maybe.

I seem to recall that at some time in the distant past, if NO officer made over the dollar limit, then the highest paid officer was considered key.

However, reseaching 1.416, 416, and the Erisa Outline Book, I see no mention of this.

So do I chalk this up to Fawlty Towers, that is faulty memory or did it change when I wasn't looking?

Maybe this should be posted under humor.

[PensionPro]

There was a time (I believe under TEFRA, 1982) when anyone who was an officer during the plan year or 4 prior years was a key employee regardless of compensation. Are you working on a 1982 plan year?!

[rcline46]

No - I am lost in the 60's. At least you remember there was something like that. Actually, it is a takeover plan (what else) with no HCEs and no owners, but does have officers that don't make much. Old, stuck relays in my head started functioning and some dim lightbulb when off. Guess its time to turn off.

[Tom Poje]

I'm in'clined' to think you are way way way off.

not even close. well, ok, maybe close.

It was under the definition of HCE (not key) that you could have one officer no matter what the comp.

my copy of CCH at least lists some of the old rules ...it was IRC 414(q)(5)(B)

[rcline46]

Tom, I said it was a dim bulb!

[GMK]

It doesn't help that definitions are different for welfare plans, e.g., for a 125 plan, all officers are HCE's.

[Tom Poje]

rcline:

Watt??????

[Tom Poje]

Interesting point,

but even the ERISA Outline Book, Chapeter 15 part F has a table for key employees, and the table goes back to 1984. e.g. officer test 45,000 in 1984, so comp goes back to 1984.

TEFRA 1982 is the document you cite, so maybe there was one year (1983?) in which there was no applicable comp limit?

certainly what is included by 1984 for officer is "(a) an officer having comp greater than 50% of the amount in effect under 415(b)(1)(A) for any such plan year

what mr Cline was referring to is the code section that said

(B) At least 1 officer taken into account - if for any year no offcier of the employer is described in paragraph (1)(d), the highest paid officer of the emplyer for such year shall be treated as described in such paragraph.

(and this was the old 414(q) which is dealing with HCEs.

so Mr Cline was correct, there was a rule he was thinking of, his bulb wasn't dim, but he was on the wrong page, he searching 416 and it should have been 414

[PensionPro]

Thanks, Tom. I had deleted my prior post regarding key employee definition under TEFRA after I realized the original question probably related to HCE definition. Here is the relevant section from TEFRA anyway ...

PL97-248.pdf

[david rigby]

TEFRA was passed in 1982, adding IRC 416 top-heavy rules, but they were first effective for PY beginning after 12/31/1983.