What Is A Key Employee For 401K? 
A key employee for a 401k generally refers to top heavy rules for a defined benefit plan . If greater than 60 % of the present value of the cumulative accrued benefits of plan assets come from `` key employees '' , the plan is considered to be top heavy . A key employee is an employee that at any time during the year was 1 -RRB- someone who owned more than 5 % , 2 -RRB- a more than 1 % owner who was paid $ 150,000 or more or 3 -RRB- an officer that was compensated at more than $ 170,000 for 2014 . The IRS has a long list of guidelines -LRB- IRS 4.72.5 -RRB- for top-heavy plans and it is best to consult with someone who specializes in this area . 