Renwanz Insurance & Financial Solutions, Carlsbad, CA
A key employee for a 401k generally refers to top heavy rules for a defined benefit plan. If greater than 60% of the present value of the cumulative accrued benefits of plan assets come from "key employees", the plan is considered to be top heavy.
A key employee is an employee that at any time during the year was 1) someone who owned more than 5%, 2) a more than 1% owner who was paid $150,000 or more or 3) an officer that was compensated at more than $170,000 for 2014.
The IRS has a long list of guidelines (IRS 4.72.5) for top-heavy plans and it is best to consult with someone who specializes in this area.
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A key employee is an employee that at any time during the year was 1) someone who owned more than 5%, 2) a more than 1% owner who was paid $150,000 or more or 3) an officer that was compensated at more than $170,000 for 2014.
The IRS has a long list of guidelines (IRS 4.72.5) for top-heavy plans and it is best to consult with someone who specializes in this area.