Small Pension Plan Audit Waiver

[Guest MCarey1]

I have a client who had 113 participants in the beginning of the year so I filed as a small plan. There were 117 participants at the end or 2003 and entry date is 4/1 so I should be okay for 2004.

But can anyone tell me if once the participant count goes over 120 and has to be filed as a large plan with an outside audit can you ever go back and file under the waiver if and when the participant count drops below 120. The instructions seem to say that you have to have filed as a small plan in the prior year to claim the waiver.

This is a country club who's employee population fluctuates constantly.

[WDIK]

I agree with your interpretation of the 80-120 Participant Rule. Once the participant count exceeds 120 you must file as "large plan." You can once again file as a "small plan" if the participant count drops below 100.

[Guest MCarey1]

But the instructions I thought say "and a small plan annual report was filed for the prior year"?

I would think this means that once you file as large plan how can you ever use the waiver again?

I am really confused. I called the DOL, but the representative told me he wasn't sure to read the Regs?????

[WDIK]

Okay, maybe I don't agree with your interpretaion of the 80-120 Participant Rule.

I think where the confusion lies is in the distintion between the general rule and the special 80-120 Participant rule.

The general rule is that a plan with 100 participants or more must file as a large plan, while a plan with fewer than 100 participants files as a small plan.

As an exception to this general rule, you can keep filing as a small plan if you previously filed as a small plan and the count doesn't exceed 120. Conversely, if you previously filed as a large plan, you can continue to file as a large plan if the participant count does not drop below 80.

You are not required to use the exception. You can fall back on the general rule, so if the participant count is 99 or less (even if you filed as a large plan the previous year) you can file as a small plan.

[Blinky the 3-eyed Fish]

Well said WDIK.

There were 117 participants at the end or 2003 and entry date is 4/1 so I should be okay for 2004.

Mariah , does the plan year not begin 4/1? If not, I am curious as to what are the eligbility requirements.

[WDIK]

I called the DOL, but the representative told me he wasn't sure to read the Regs?????

Responses of various service providers after taking the DOL representative training course:

Mechanic - "I'm not sure why your car is making that noise. You ought to read your owner's manual."

Physician - "I'm not sure why your knee is aching. You ought to read an anatomy book."

Lawyer - "I'm not sure if that is legal. Get back to me after you've finished your course on tort reform."

Actuary - "I can't calculate that premium right now, but why don't you browse through these mortality factors."

WDIK - "I have no idea, let's post on the Benefits Link Boards."

[stephen]

Perhaps I missed something but, with 117 participants at the end of 2003 and entry on 4/1 wouldn't MCarey1 need to calculate who enters on 4/1/03 add to 3/31/03 count and subtract anyone paid in full on 4/1/03 (usually none) to determine the participant count for the beginning of the 3/31/04 plan year. (Assuming I have the correct plan year end...)

Thus if 3 or more participants enter the plan 4/1/03 and no one is paid in full on 4/1/03 a full 5500 with audit will need to be filed for the plan year ending 3/31/04.