Resources  ❯  Accounting Terms

Key Employee

[kee EM-ploi-ee]

What is the definition of Key Employee?
In the context of top heavy plans, a key employee is defined as 1) an officer of the employer earning more than $130,000; 2) an individual who owns more than 5 percent of the employer; or 3) an individual who owns more than 1 percent of the employer and has compensation greater than $150,000.
Using Key Employee in an Example

In determining the top heavy status of a retirement plan, the company identified three key employees: the CEO who earns $200,000, a shareholder owning 6% of the company, and a vice president owning 1.5% of the company with a salary of $160,000.

Using Key Employee in a sentence

During the meeting, the HR manager explained that adjustments to the pension contributions were necessary due to the identification of additional key employees this fiscal year.

Related Terms

Keogh Plan

A qualified retirement plan for self-employed individuals or unincorporated businesses, also known as an HR 10 plan, which allows for tax-deferred contributions and potential tax deductions.
Learn More

Key Industry

An industry of primary importance to a nation's economy, often critical for its infrastructure, economic stability, and growth.
Learn More

Key Person Insurance

A type of business-owned life insurance contract that is taken out on the lives of principal officers or essential employees of a company, providing guaranteed death benefits to the company and potentially accumulating a cash surrender value.
Learn More

Kiting

Kiting is a fraudulent banking practice involving the issuance of checks from an account without sufficient funds, with the expectation that deposits will clear before the checks are processed. This practice exploits the float time between the check being written and its clearance. Kiting can also refer to manipulating the face value of a check or inflating stock prices through deceptive trading strategies.
Learn More

1031 Question? Ask ARTE

Deferred's AI 1031 Research Assistant is trained on 8,000+ pages of US tax law and outperforms human CPAs by 22%+

CHAT NOW
Deferred.com Resources

Recent Posts

Can you 1031 exchange a vacation home?
Because the 1031 Exchange rules permit owners to use the property part of the year, exchangers can have a cash-flowing, appreciating investment that also serves as their semi-permanent vacation property.
Aaron LaRue
1031 Improvement Exchange
Learn how to leverage an improvement exchange (using exchange funds for new constructions, additions, or upgrades) to increase the value of your real estate investment portfolio.
Aaron LaRue
1031 Exchange Options
Take advantage of our profit-generating ideas to use the 1031 Exchange to make your property portfolio more profitable.
Aaron LaRue
What are the disadvantages of a 1031 exchange?
The 1031 Exchange is a great way for businesses and investors to take advantage of the additional value of their real estate and put it into their next purchase, but are there tradeoffs to consider?
Aaron LaRue
What Happens to Depreciation in a 1031 Exchange?
Depreciation recapture is a process then enables the IRS to collect taxes on the financial gain you have made from the sale of an asset. Exactly what depreciation recapture rate will apply will depend on your individual circumstances.
Aaron LaRue
Form 6252: Report an Installment Sale
Use this form to report income from an installment sale on the installment method.
Aaron LaRue
About DeferredReviewsPricingSchedule Intro Call
Partner with DeferredCareersEngineering Blog
ResourcesARTE: AI Tax AssistantDeferred Gains Calculator1031 Exchange Articles
Accounting Terms1031 Rules per StateFind a 1031 Intermediary
© 2024 Deferred Inc.
Terms PrivacyCommunicationsContact