Categories of participants?

[Guest 410b]

I was looking at our prototype plan in regard to participants. I am confused about something.

There is a section for definitions.

Participant - means an Active Participant or an Inactive Participant.

Inactive Participant - means an Employee or former Employee who is not an Active Participant but who has a Benefit remaining under the plan.

Active Participant - means an Employee who has become an Active Participant in any Component pursuant to the terms of the Plan and who remains in Covered Employment with respect to such Component.

And then searching on the net, I found this for active participant as part of a response in a thread elsewhere:

An individual is an active participant in a defined

contribution plan if either employer contributions, employee

contributions, or forfeitures are allocated to the

individual's account with respect to a plan year that ends

with or within the individual's tax year. IRS Notice 87-16,

Section I.A.

So what is an employee who has entered the plan but is not deferring and has no money in their account?

[WDIK]

Active participant.

[Guest Sieve]

WDIK is right. Your plan may not call that employee a Participant, but he/she is a participant for IRS & DOL purposes--needs to be counted for the 5500, receive an SPD, etc., etc.

[Guest 410b]

What a can of worms!

Does etc, etc include the W2 check box?

[Guest Sieve]

The W-2 instructions give you an answer to that question. The box isn't checked if jsut because you are a "participant", but only if you are an "active participant" as defined in the instructions (the rules come from Notice 87-16, which you quote from). In other words, your plan's definition of a particiapant has nothing to do with whether or not you check the box on the W-2.