### Question
How is the "key employee" defined?


### Answer
The term **key employee** is defined in *26 U.S.C. § 416* as follows -

> 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**

