Can anyone tell me whether former employees/participants or beneficiaries receiving benefits under a plan are included in the "total participant" number in calculating the turnover rate? I have found discussion about whether you include both vested and nonvested participants in the calculation, but nothing on whether former employees are included. My instinct tells me that they should not be included - only active employee participants should be included. I would welcome any of your thoughts.

Rev. Rul. 2007-43, which gives guidance re: partial terminations (which I assume is what you are referring to), says that "[t]he turnover rate is determined by dividing the number of participating employees who had an employer-initiated severance from employment during the applicable period by the sum of all the participating employees at the start of the applicable period and the employees who became participants during the applicable period."

I don't see how a former employee or a beneficiary can be considered a participating employee. Since the Rev. Rul. doesn't define "participating employee", then we define it in its normal usage--not just a participant (which may be confusing as between IRS & DOL), but a participant who is also an employee.

Thanks! That is exactly how I interpreting that language in the Revenue Ruling.