Key Employee definition

[Tom]

I believe this is an easy question but I want to be 100%.  Plan sponsor has 2-1% owners who are employed by the business.  The other 98% is owned by the mother of one of the 1% owners and she does not work for the plan sponsor.

Clearly seems the 1% owner would have her ownership attributed to him then as a 99% owner.  I know some nuances changed in the last several years.

Comments?

Thank you,

Tom

[RELUCTANT_LAWYER]

Yes, the definition of "Key Employee" requires attribution under the Section 318 rules under which an individual is attributed the ownership of his/her parents in the same entity. The 1% owner with the mother who is the 98% owner is deemed to own 99% of the shares of the entity.