5500

[Guest mariaguzzetta]

Can anyone please clarify the definition of Active Participant on the 5500 form for a 401k PSP. Someone has suggested to me that even an employee who is not yet eligible to enter the plan because he has not yet completed the Year of Service requirement is still considered an Active Participant. That seems to make no sense to me, although the instructions due elude to employees earning credited service. Please help I have a plan that is hovering just under 100, but if I have to add additional participants, I have a problem........

[KIP KRAUS]

I have never considered an employee who has not met the eligibility requirements as a plan participant for 5500 purposes. Even though a person may be given credited service based on past service once he enters the plan I wouldn’t consider this person an active participant until he actually enters the plan.

[E as in ERISA]

I agree.

[Kristina]

If you have different eligibility requirements for the 401k deferrals than you have for the psp, you could have an active participant who has not yet completed the eligibility requirements to participate in the other money source.

For instance, if the eligibility requirements for the 401k deferrals are age 21 and 6 months of service with quarterly entry and you have age 21 and 1000 hours in the eligibility computation period for the profit sharing: an employee who has achieved age 21 and is hired on 1/1/02 will enter the plan on 7/1/02 for deferral purposes and 1/1/03 for profit sharing.

For testing purposes, one must just become a participant to be an active participant, so when the participant entered 7/1/02 for deferral purposes, they became an active participant.

By the way, if your plan was a Sch I filer for 2000, you would not have to file as a Sch H filer until the employee count on line 6 of the 5500 exceeded 120.