Key Employee

Definition

An employee who, at any time during the plan year, is
(i) an officer of the employer having an annual compensation greater than,

Year

2007

2006

2005

2004

2003

2002

Compensation

$145,000

$140,000

$135,000

$130,000

$130,000

$130,000

Year

2013

2012

2011

2010

2009

2008

Compensation

 $165,000

  $165,000

 $150,000

 $150,000

$150,000

$130,000

 


(ii) a 5-percent owner of the employer,

(iii) a 1-percent owner of the employer having an annual compensation from the employer of more than $150,000.

A plan is determined to be top heavy , if the following applies:

  • Defined benefit plan if, as of the determination date, the present value of the cumulative accrued benefits under the plan for key employees exceeds 60 percent of the present value of the cumulative accrued benefits under the plan for all employees, and
  • Defined contribution plan if, as of the determination date, the aggregate of the accounts of key employees under the plan exceeds 60 percent of the aggregate of the accounts of all employees under such plan


 

Referring Cite

IRC § 416(i))

Additional Helpful Information

  • For purposes of clause (i), no more than 50 employees (or, if lesser, the greater of 3 or 10 percent of the employees) shall be treated as officers