Inactive employees and 5500 participant count

[Tinman]

A plan has eligible employees, still on payroll, but worked no hours and earned no compensation for the 2003 plan year.

Question - are these people counted on 7a of Form 5500 as "active participants"? For 2003, it won't affect the filing of Sch H vs. Sch I, but may have an effect in the future.

Opinions?

[WDIK]

First, I'm trying to wrap my feeble intellect around the concept of being on the payroll while working no hours and receiving no wages. It seems to me that these individuals are former employees, not current employees and do not meet the definition of "active participants" in the the Form 5500 instructions. The instructions state in part:

Active participants include any individuals who are currently in employment covered by a plan and who are earning or retaining credited service under a plan. This category includes any individuals who are eligible to elect to have the employer make payments to a Code section 401(k) qualified cash or deferred arrangement. Active participants also include any nonvested individuals who are earning or retaining credited service under a plan.

[Tinman]

I can understand your confusion! This is a "rent-a-cop" organization and many employees are "on call" and may not be used during the year. However, the plan sponsor still considers them employees and lists them on the certified census they submit each year.

[david rigby]

If the facts are:

- EE is not terminated (which is similar to, but not exactly the same as "actively employed"), and

- EE is "retaining credited service" (see above), then

I vote to count them as active participants.

[Guest duh]

Do these "rent-a-cops" get w-2's after they get their badge for the night? Do they receive any benefits that the rest of us get like medical, vacation, etc..... ? If they don't receive any benefits, I would be reluctant to consider them employees.

[david rigby]

...don't receive any benefits...

Perhaps it is just me, but I have never heard of this standard as the definition of who is (or may be) an employee. Probably based on the nature of the employment relationship, who controls the working hours and conditions, etc.

BTW, I thought the question was about active participants.