Key Employee Question

[Dougsbpc]

Suppose you have a 401(k) plan that is sponsored by a partnership of corporations. Each corporation then adopts the plan to become a participating employer. 

This is often the case with a group of physicians. 

If each corporation only employs one physician, is that physician automatically considered a key employee because he/she owns 100% of their corporation? What if they own 100% of their corporation but their corporation only owns 4.5% of the partnership? Does that then make them a non-key participant?

Thanks!

[John Feldt ERPA CPC QPA]

They are Key Employees. They own more than 5% of the employer or they own more than 5% of a participating employer. 

[Luke Bailey]

As explanation for John Feldt's answer, Section 416 specifically says to determine 5% owner for each separate entity, not by applying controlled group rules.