Key or Former Key?

[perplexedbypensions]

Company owned 51% by Participant A and 49% by Participant B.

December 28, 2018, Participant A sells shares to Participant B, who is now the 100% owner.

Participant A compensation in 2017 was $108,000.

For the 12/31/2018 Plan Year, both A and B are HCE's.

Is Participant A considered a Key Employee or a Former Key Employee, since there is no ownership as of 12/31/2018.

Thank you!

[Lou S.]

Assuming calendar year plan.

For 2018 Part A is Key by virtue of owning more than 5% in the current year.

For 2019 Part A is a Key by virtue of owning more than 5% in the prior year.

For 2020+ Part A is a former Key unless facts change.

For ownership determination you look at highest ownership percentage at any time during the year, not just the last day of the plan year.

 

[perplexedbypensions]

Thank you, I thought that it was as of the determination date of the last day of the year.