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Participant Count


Guest M. Pederson

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Guest M. Pederson

I posted this question a few weeks ago but am hoping I might get a better response. When doing the participant count for a school are substitute teachers no longer considered participants. Their eligible to participate immediately. They don't receive the employer match but can do their own contribution. However they may work once a month or every other month. I've talked to DOL, IRS and TIAA CREF and none have a good answer to this. They point to the definition of a participant which I understand but this unique circumstance is difficult to apply. Thanks in advance for any guidance.

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Guest M. Pederson

It's unique in that they don't work regularly. They may work 5 times all school year. Some may work once a week. They may work a couple times in October and then no more the rest of the year. At what point are they considered employed.

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I'll go out on a limb and assume the question has to do with counting "participants" as of January 1st for purposes of determining whether the 403b plan needs an audit.

And whether substitute teachers who are eligible when they work but only work sporadically and may not have worked any in the several months prior to January 1st have to be counted.

There's no question that if they have an account balance they're counted but if they've never contributed then what?

I suspect the answer is if they haven't been "terminated" in the payroll records then they're still considered active, eligible employees and must be counted.

That's not to say I think the employer can game the system by "teminating" all substitutes between working gigs and would suggest the better solution would be to see if they can be excluded under the "less than 20 hours/week" option for 403b deferrals (or better yet change to a 401k and exclude them as a class).

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Guest M. Pederson

You are correct; it is in part determining the audit requirement. They are going to amend the adoption agreement to exclude those working less than 20 hours a week but it's not in place now. The maintenance in the payroll records is an interesting to look at it. Thanks

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