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Hi, 

1.Are all employees included for the 25 count or can we exclude union.employees. ?

2. Are employees that work less than 1000 hours included for the 25 count? 

Thank you.

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Well, the premium is based on participants, but the eligibility is based on employees.  From page 38 of the 2019 instructions:

"Small-Employer Cap qualification – If the plan qualifies as a small-employer plan, the Variable-rate Premium may be capped at an amount lower than the MAP-21 Cap. Determining whether a plan qualifies for the Small-Employer Cap – For this purpose: 

  • a plan is a small-employer plan if the aggregate number of employees of all contributing sponsors of the plan and all members of the contributing sponsors’ controlled groups, as of the first day of the Premium Payment Year, is 25 or fewer,  
  • the aggregate number of employees is determined in the same manner as under section 410(b)(1) of the Code, taking into account the provisions of section 414(m) and (n) of the Code, but without regard to section 410(b)(3), (4), and (5) of the Code, and 
  • employees are counted as of the first day of the Premium Payment Year, not as of the Participant Count Date or the UVB Valuation Date.  

Note that a plan with 25 or fewer participants does not necessarily qualify for the Small-Employer Cap because the eligibility criterion is based on employees, not the Participant Count.  For example, if a plan has 15 participants, but there are more than 25 employees (taking into account all employees of all contributing sponsors of the plan and all members of their controlled groups), the plan does not qualify for the cap.

Also note that a plan with more than 25 participants might qualify for the cap.  For example, consider a contributing sponsor with 20 employees, all of whom are participants in a plan. If the plan also covers 15 former employees who are either terminated vested or retired, there are 35 participants in total.  This plan would qualify for the cap (assuming there are no other contributing sponsors and no controlled group members)."

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On 9/12/2019 at 10:06 AM, SSRRS said:

Hi, 

1.Are all employees included for the 25 count or can we exclude union.employees. ?

2. Are employees that work less than 1000 hours included for the 25 count? 

Thank you.

To answer your questions .........

My understanding is that

1.   ALL employees are included.   The 2nd bullet point above seems to say   "ignore the Union employee exclusion" in  410(b)(3).    i.e.  count them

2.   There is no criteria considering an employee's hours  .......  count them on 1/1/2019  regardless of Hours.

 

.....   Jeff

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