Key/top heavy

Suffering from Friday brain cramp.

John Doe owns 100% of corporation A, Sponsors Plan (X) - calendar year plan. During 2021 calendar year, John sells ASSETS of corporation A to Edward Doe. Edward has corporation B  - keeps the same corporate name, but now under new employer id# (he's 100% owner) and assumes the assets and liabilities of plan X and sponsors the plan. The former owner John Doe continues as a non-owner employee in corporation B.

For 2022, John would appear to be a Key employee, since for part of the PLAN year containing the determination date (2021), he owned 100% of the corporation sponsoring the plan, which was subsequently taken over by corporation B. Have I got that right? Then in 2023, he's a former key, and his balance is excluded from the top heavy test. Have I got that right?

Thjis is probably one of those things where I'll come in on Monday, look at it and say, "Duh, the answer is simple" but I'm chasing my tail at the moment.

Thanks!

Corp B adopted the plan as a sponsoring employer on the date of the sale? Did Corp A revoke its adoption of the plan, or does A continue to sponsor the plan?

If A still sponsors the plan, then John is still a 5% owner and continues to be a Key employee. If A no longer sponsors the plan, then, although it's less than crystal-clear under the regulations, I would agree with your analysis and treat John as a former Key employee for plan years after 2022.

Thanks CB. A no longer sponsors the plan - B is the sponsor of the plan, adopted on the date of the sale. I very much appreciate your response!