Key employee definition for top heavy

A plan sponsor was sold 100% to an ESOP for its employees.  So the plan sponsor is now the ESOP.  I'm told there are no corporate officers but I am checking with their CPA firm.   The ESOP has a Board of Directors who are also plan participants.  I'd think of them as officers.  But if none of them have wages over the key employee limit, then it seems there are no key employees.  I thought I read at one time there had to be a minimum number of officers, or at least one.  All I can find now is there is a defined maximum number but I don't see anything about minimum number.

Thank you in advance for comments.

Consider this:

T-13 Q. For purposes of defining a key employee, who is an officer?

A. Whether an individual is an officer shall be determined upon the basis of all the facts, including, for example, the source of his authority, the term for which elected or appointed, and the nature and extent of his duties. Generally, the term officer means an administrative executive who is in regular and continued service. The term officer implies continuity of service and excludes those employed for a special and single transaction. An employee who merely has the title of an officer but not the authority of an officer is not considered an officer for purposes of the key employee test. Similarly, an employee who does not have the title of an officer but has the authority of an officer is an officer for purposes of the key employee test. In the case of one or more employers treated as a single employer under sections 414(b), (c), or (m), whether or not an individual is an officer shall be determined based upon his responsibilities with respect to the employer or employers for which he is directly employed, and not with respect to the controlled group of corporations, employers under common control or affiliated service group. A partner of a partnership will not be treated as an officer for purposes of the key employee test merely because he owns a capital or profits interest in the partnership, exercises his voting rights as a partner, and may, for limited purposes, be authorized and does in fact act as an agent of the partnership.

The next Q&A, T-14, states: “There is no minimum number of officers that must be taken into account.” But the reasoning in T-13 suggests that the minimum is one, even if the one might not be a human or might not be a plan-eligible employee.

The trustees or other fiduciaries of the ESOP might not, because of that role, be officers of the ESOP-owned corporation or company.

But somehow the organization must have a way to operate. Someone—although he, she, or it might not be an employee—has authority to obligate the corporation or company.

Also, T-15 explains that an organization other than a corporation has officers (in the sense provided for the top-heavy rule).

26 C.F.R. § 1.416-1 https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.416-1

It may help to break out the two entities involved as well. 

The corporation itself still exists; it simply has a new owner. The ESOP is not the plan sponsor; the corporation is. The corporation is created under state law, which as Peter notes generally requires that a corporation have at least one officer. (For example, one state I do work in specifies two different offices that must be filled, but they can be filled by the same person.) The corporation is still the entity employing employees, conducting business, etc. The corporation has a board of directors; the ESOP does not. Even after being sold to an ESOP, the corporation is under the control of the corporation's board of directors (who generally are appointed by the ESOP trustee in the trustee's capacity as the sole shareholder). The people you are looking for will be at this level. 

The ESOP is a retirement plan sponsored by the corporation. The ESOP is the corporation's sole shareholder. It has a trustee, administrator, etc., but generally would not have officers, employees, or a board of directors. 

From there, I think Peter's comment will help you figure out which individuals are officers for this particular issue.

Thankyou for the comments.  Yes there is a corporation, which is wholely owned by the ESOP.  I had asked their corp tax advisor as to officers and was provided Board of Trustee names.  Likely they are one and the same.  Someone is in charge of decision making for the corporation as you say.  However, I also see none of these Directors(Officers) earn more than the key employee threshold amount.  And so it appears there are no key employees for top heavy purposes.  Seems illogical and against what the top heavy rule is trying to accomplish.