### Question
How does the law define key employee?


### Answer
Under *26 U.S.C. § 416*, **key employee** is defined as:

> an employee who, at any time during the plan year, is—


(i) an officer of the employer having an annual compensation greater than $130,000,


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


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

#### Citation:
  - *26 U.S.C. § 416*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter D-Deferred Compensation, Etc. > PART I-PENSION, PROFIT-SHARING, STOCK BONUS PLANS, ETC. > Subpart B-Special Rules**

