### Question
What does key employee mean?


### Answer
**Key employee** has the following meaning in *26 U.S.C. § 416*:

> an employee who, at any time during the plan year or any of the 4 preceding plan years, is—


(i) an officer of the employer having an annual compensation greater than 50 percent of the amount in effect under section 415(b)(1)(A) for any such plan year,


(ii) 1 of the 10 employees having annual compensation from the employer of more than the limitation in effect under section 415(c)(1)(A) and owning (or considered as owning within the meaning of section 318) the largest interests in the employer,


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


(iv) 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**

