People who opt out--are they participants?

[BG5150]

I have a plan where someone who has irrevocably waived her participation in the plan (and all other plans provided by the Employer).

She has otherwise satisfied the eligibility and entry requirements for the plan.

Is she considered a participant for testing and 5500 purposes?

If so, why? It's not like she is temporarily declining to make a 401 deduction and may decide later to do so. She could not even if she wanted to...even if they terminate this plan and put in another a year from now.

[WDIK]

It is my understanding that based on such an election the individual would not be a participant for Form 5500 or discrimination testing purposes, but would be taken into account to determine if the plan passes coverage.

[Below Ground]

My understanding agrees with WDIK, so chalk up 2 with that reply.

[Guest Sieve]

3

[Guest amadeus]

If she's not excludable for coverage, how is she excludable for nondiscrimination?

[Mike Preston]

You misread the reply. The individual is not a participant for non-discrimination testing purposes, like any other person employed by the employer not covered under the plan. That is, shows up as a big fat zero in all the tests. It was never said that the person was excludable from the non-discrimination test.

[Tom Poje]

which nondiscrim test are you talking about?

for coverage, once a person meets the eligibility requirements (and entry date) they are includable and not benefiting.

if they are excludable from the plan, then they are not included in the ADP test or acp test. (this would be no different than someone who fails the last day or hours requirement for a matching contribution - they are not included in the ACP test either)

there is no such exception for nonelective contributions, so they would be a 0 for the avg ben % test as well as any rate group test.