The plan is a frozen 401(k). Has filed for the past 3 years (froze in 2008) with a participant count of 65. The plan year is 7/1-6/30. A corrective contribution to approximately 150 ppts. for a prior year was made to the plan in October 20xx, so that will not affect 7/1/xx-6/30/yy plan year because on 7/1/xx, there were still only 65 ppts. with an account balance. HOWEVER, the service provider put the money in the wrong plan. Therefore, although feasibly, had the corrective contribution been placed in the correct plan in October, there could have been more than 100 (and greater than 120, if the count is right) ppts. with account balances as of the start of the 20yy plan year. BUT, the discovery was not made until the Plan was well within the 20yy plan year, and then money was moved at that time, bringing the participant count to roughly 150 ppts (inclusive of the frozen 65) as of 1/31/20yy. Looking forward to the 20yy plan year filing-do I base participant count on what "should have been" versus what it was on its face (i.e., that because the service provider mistake had yet to be identified as of 7/1/20yy, as far as the plan was concerned, there were only 65 ppts. with an account balance in the plan)? I also note that the plan is terminating, so the 20yy plan year (or short plan year depending on how fast we get the assets out) will be the final 5500 filing.
I have read through the form's instructions, and combed through regs, rev. rulings...I don't see any guidance. So if anyone has encountered a similar situation and can share your outcome, or if you want to proffer some advice, I would really appreciate it.
Edited by Beneflaw, 24 February 2012 - 09:31 AM.