Key Employee


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Key Employee

A very important employee. A key employee may have contacts highly beneficial to the company, may work hard and generate more revenue than any other employee, or may have some other skill that would be difficult or impossible to replicate in another employee. Often, but not always, a key employee is a manager. A company may purchase key person insurance to protect itself against the possibility that an employee may unexpectedly die or become unable to work, which would deprive the company of his/her skills.
References in periodicals archive ?
In a recent survey of the Principal Financial Well-Being Index, more than three-quarters of key employees said they were interested in a tax-advantaged plan to help them save more for retirement, beyond the qualified retirement limits.
Under these facts and circumstances, X does not meet the responsibility test and thus is not a key employee of U.
If an organization does not establish a presumption of reasonableness and the IRS questions compensation paid to key employees, the burden is on the organization to prove that the compensation is reasonable.
Key employee insurance still applies if the "key" is an owner.
their fortunes, they are coming to recognize the importance of retaining and rewarding the key employees who kept them afloat during the recession.
The real value of a split-dollar arrangement lies in a company's ability to help a key employee buy permanent life insurance and maintain it in force while it incurs the acquisition costs and front-end load charges (agent commission).
When a key employee considers a new employment opportunity, he or she also must consider the value of the deferred compensation that would be lost.
If the SEP/IRA is a "top heavy" plan, a minimum employer contribution must be made in the amount of the lesser of 3% of compensation or the largest percent of compensation contributed on behalf of any key employee.
The first step, though, is to prepare a checklist of family and key employee information:
Pulliam, TC Memo 1997-274, involved (1) the transfer of a funeral home business by a parent corporation (Homes) to a newly formed subsidiary (Chapel), (2) distribution of 100% of the Chapel stock to Homes's sole shareholder and (3) sale by the sole shareholder of 49% of the Chapel stock to a key employee.
Critical to this determination is the key employee concept.
For example, option shares can be granted to a particular key employee using a factor obtained by dividing his base compensation by the aggregate base compensation of all key employees, or options could be granted so that vice presidents get 1,000 shares, senior vice presidents 2,000 shares, executive vice presidents 3,000 shares, and the president 4,000 shares.