Understanding Key Employees

To ensure that companies comply with governmental regulations, you must run NDTs to identify key, or HCE. An HCE is a person who meets at least one of the following criteria:

• Owned a specified percentage of the company at any time during the determination year or the look-back year.

• Received compensation in excess of a specified amount during the determination year or look-back year and, at the election of the employer, is a member of the top-paid group during the determination year or look-back year.

You review and audit employee information and payroll history information in the process of determining key employees. For example, you can review information in the Employee Master Information table (F060116) to determine whether the employee is an officer.