Form 5500 line 7G

[Guest Aspencer]

On line 7G does anyone know if I should include terminated participants that are 0% vested in this count? The question reads: Number of participants with account balances at the end of the plan year? Any info would be greatly appreciated! Thanks

[Tom Poje]

One question for you: Your document doesn't say 'forfeit ees whose vested balance is 0?"

Lets make an interesting example out of it. This wouldn't happen in the real world, but what the heck

Only one person in the plan, and he quit, 0 vested with an account balance.

so ee not entitled to future benefit, so he wouldn't show up on line 7c. therefore line 7f total ees shows as 0.

Now, if I treat the ee as having a balance I have 1 person with an account balance - even though line 7f clearly said I have 0 particpants.

Bet the IRS would write back about that one!

actually, if you look at the instructions for line 7g it says

'enter the number of participants included on line 7f...'

since you didn't include the ee on line 7f you would not include on line 7g.

Now that I think about it, maybe that example is not so impossible.

An owner could exclude himself from the plan and he sets up a plan for any employees. His sole employee works one year, gets a contribution and then quits at 0 vested. the new help is not yet eligible for the plan. Interesting. A plan with assets and no participants! bet the IRS would love that!

[Guest Aspencer]

Ok, so this tells me that I should not include the terminated ees? This is what I originally thought, but some other people in my office are disagreeing. I checked the 5500 instructions and they were too general regarding line 7G to help.

Thanks for giving me your input. I really appreciate it.