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Key Employee

A type of employee defined in Internal Revenue Code Section 416 (i)(1)(A) that includes officers whose annual compensation is greater than $215,000 in 2023, shareholders holding 5% or more of the company, and owners who own 1% or more and make over $150,000. Under the rules of IRC Section 409A, after "key employees" end their service to the company, other than by death or disability, the company must delay nonqualified deferred compensation payouts for six months. This six-month-delay rule extends also to restricted stock unit (RSU) grants that have a deferral feature.

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