Question

XYZ Company covered the following employees under its qualified plan. Would the following employees be considered a Key Employee for 2018 (Yes OR No)?

9. Rob, a 4% owner and employee with compensation of $32,000 _____

10. Robin, Rob’s cousin, a commissioned salesperson with compensation of $160,000 last year – making her the highest paid employee. Robin owns 2% of the company. ______

11. Randy, the chief operating officer, who had compensation of $155,000 last year, but was not in the top 20% of paid employees. _____

Answer 1

They criteria required be considered a Highly Compensated Employee for 2018 are (any one of the criteria should be satisfied): (1)) Salary >$120,000
2)) owns > 5% company
3)) Top 20% of paid employees

9. Rob, a 4% owner and employee with compensation of $32,000 : NO (None condition satisfied)

10. Robin, Rob’s cousin, a commissioned salesperson with compensation of $160,000 last year – making her the highest paid employee. Robin owns 2% of the company.: YES (Salary >$120,000)

11. Randy, the chief operating officer, who had compensation of $155,000 last year, but was not in the top 20% of paid employees.: YES (Salary >$120,000)

Please do rate me and mention doubts, if any, in the comments section.