Form 5500 partic./employee count

[Guest Achilles]

On the form 5500, page 2, question #6 - asks for the total number of participants at the beginning of the plan year.

Can someone clarify this?

If pulled from the previous plan year, would you use question 7f or 7g?

Through my software, it appears that it pulled 1999's answer for 7g, and populated it in question #6 for 2000.

Is this correct?

Thanks in advance!

[Guest galdridge]

Since January 1st is typically an entry date for participation in a Plan, you may not necessarily be able to just use the prior EOY participant count. To get the correct count, you should determine the number of eligible participants as of January 1st based on an accurate employee census.

To determine the amount that should be used on line 6, you may find it helpful to start with the number of participants entered on line 7f of the 1999 Form 5500; however, you will need to add those who become eligible as of the first day of the plan year and subtract those who were paid out as of the first day of the plan year. Be careful not to remove anyone that is still entitled to current or future benefits under the plan.

Glenn Aldridge, CPA

Audit Manager

Bennett Thrasher PC

Atlanta, Georgia

[mwyatt]

At long last, the 5500 has clarified the point that the beginning of the year count does include participants who enter on the first day of the year. The software package that we use (HyperPrep/Relius) enters the prior year ending count in the beginning of year field but it is not "locked in" (i.e., can edit this number). So you will want to add to this number those who entered as of the first day of the year.

The argument of whether to include those who enter on the first day of the year goes back forever (the IRS I think tended to lean to the position that the beginning of year count should equal the prior end of year count, but the DOL/PWBA argued otherwise). Why it took this long to clarify in the forms instructions is a mystery to me (I know, if you search these Boards you can find me arguing the "wrong" position a couple of years ago ).