2007 plan year, plan had 107 eligible participants. Used the transition rule for 2007. This year plan has 109 eligible participants. Can we use the 80-120 transition rule again or is the audit required? Im thinking the latter rather than the former.

Still no audit. RUle is you can do the same as last year until you go over 120.

ok thanks, so once line 6 on 550 is over 120, then you audit.

You got it. Of course if over 100 you could always voluntarily go into audit.

Just a wee technical reminder. The number of participants is measured as of the FIRST day of the current plan year, not the last day of the prior. So, if your plan had 109 participants on December 31, 2007 and 12 entered the plan on January 1, 2008, you would be over the 120. See §2520.104-41(b)

thank you Becky