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Is there any regulation for determining who is an active participant under a professional service DB plan? It appears regulations under §4006.2 may be obsolete. I don't see any regulations under 29 USC §1321 (ERISA §4021), which sets up the exemption.

I'm looking at a CB plan with 22 definitely actives, two eligibles but with a $0 HAC, and two terminated participants with accrued benefits.

There are different definitions for different purposes, but the definition of "active participant" for this purpose is elusive. By some definitions there are 26 actives, 24 actives, and 22 actives. Any direction is appreciated.

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I think all plan participants (and beneficiaries) have to fall into one of 3 categories: active participants, retired receiving benefits, and terminated but entitled to future benefits. Any participant who is neither retired and receiving benefits, nor terminated and entitled to future vested benefits, would have to be an active participant.

If there is any doubt, request a coverage determination from the PBGC.

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But is there any authority that defines it--or are we left to our own conjecture? FWIW, I can conject with the best of them.

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The rule is: "A private-sector qualified defined benefit plan is exempt from PBGC coverage if: It has not covered more than 25 active participants at any time since ERISA was enacted (September 2, 1974), and. It is established and maintained by a “professional service employer.”".

Your plan document defines who is an active participant.  If at any point you had more than 25, you are covered by PBGC.  It doesn't really matter how many you have at the beginning of the year, or the end of the year.  It is an "any day" test.  

Can you provide more detail around, "By some definitions there are 26 actives, 24 actives, and 22 actives"? 

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I don't think for PBGC coverage you can get 22 under the regs as I agree with CB Zeller.

The question is do you have to include the 2 eligible employees with 0 benefit (presumably because it is offset by a DC plan?) and it's been a while since I researched but I think the answer is yes you have to include them which would mean you have 26.

If your document EXCLUDED the 2 with 0 benefit you don't need to include them but because the document INCLUDES them but they have 0 benefit you still need to count them.

It's kind of like the 401(k) plan that has to be audited as a large plan because it has more than 100 (or 120) eligible participants even though many have no account balance because they chose not to defer.

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5 minutes ago, Lou S. said:

I don't think for PBGC coverage you can get 22 under the regs as I agree with CB Zeller.

That's my question, what regs?  There don't seem to be any regs on point. The now obsolete regs under §4006.2 indicated that participants who maintain or add service credits are "active participants".  Please don't tell me what to surmise--without regulations we can make a reasonable argument either for or against exemption. I want to say the Plan is exempt, but I hope there is guidance that helps me. Can someone provide that citation?

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57 minutes ago, Dalai Pookah said:

But is there any authority that defines it--or are we left to our own conjecture? FWIW, I can conject with the best of them.

The only authority would be to request a coverage determination from the PBGC - which is a fairly painless process, actually.

10 minutes ago, Lou S. said:

The question is do you have to include the 2 eligible employees with 0 benefit (presumably because it is offset by a DC plan?) and it's been a while since I researched but I think the answer is yes you have to include them which would mean you have 26.

It can also happen when you have the benefit for a group defined as 0, or if you have employees who met the plan's entry requirements, but never satisfied the hour requirement to accrue a benefit in any year. In both of those cases I think you still have to count them as active. 

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I'm not disagreeing with anyone but many years ago I called PBGC about this issue when the process was to call or email and was referred to a lawyer at PBGC who I will not name.  After a long winded conversation it became clear that he did not know the answer.  He told me "the number that's on the form.  I don't complete those forms".     It was the same issue - someone technically a participant with no benefit, who would not be in the count on the form.   So I actually posted on this board and the consensus as I recall was to count everyone technically eligible whether or not they had a benefit.

So this highlights the lack of a clear answer without a coverage determination IMO, especially now that the DC deduction limit is affected.

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