When is a stockholder/owner considered "terminated"?

[jkharvey]

For plan purposes when does an owner (stockholder) actually "terminate"? The owner in question has not disposed of his shares, so still owns more than 5% of the company. He has, however, stopped taking salary and is not sharing in corporate gain/loss. I still need to confirm if he is actually performing any services, but for this scenario, let's say he is not. At what point is he "terminated"?

Thanks

[My 2 cents]

Not a lawyer but it seems to me that stock ownership is not relevant when assessing whether someone is to be treated as active for plan purposes.

[chc93]

Not a lawyer but it seems to me that stock ownership is not relevant when assessing whether someone is to be treated as active for plan purposes.

Yes... and from numerous ASPPA conferences (of course, verbal), no compensation means not in any coverage or discrimination tests... so it's as if the participant is "terminated", or at least "not employed".

[Bill Presson]

I would think for a C or S corp that not getting a paycheck would at least be a good indication although we all know of owners that work with out taking paychecks from time to time.

For a sole proprieto/LLC, etc, I would think it would be a bit more difficult because of the earned income.

This would definitely be a facts and circumstances situation that would need to be documented.