Am I a key employee?

Hi

Plan is calendar 2020.

5%+ owner terminates in April 2020 and sells his ownership to the other shareholder.

Under HCE, because he was an HCE on 1/1/2020, he is HCE for 2020.

How key employee rules, are the same here i.e. he is a key for 2020 because he was on 1/1/2020?

Thank you

If he was a more than 5% owner at any point during the Plan year he is a key employee. See §416(i)(1)(A)- (i)-(iii).

If they are a 5% owner on any day in a year they are a Key Employee

https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=26-USC-1004659535-204952971&term_occur=999&term_src=title:26:subtitle:A:chapter:1:subchapter:D:part:I:subpart:B:section:416

That link is found if you click on the key employee link here.

https://www.law.cornell.edu/uscode/text/26/416

Thank you both.