80-120 Rule

[Lori H]

I know Line 6 on 5500 pretty much dictates when the plan is eligible for Large plan status and an audit. Line 6 is based on the number of ELIGIBLE participants at the beginning of the plan year. If a participant was eligible and terminated during the plan year, they would be included in Line 6. My question is, if a participant separated from service prior to the beginning of the plan year, but had not been paid out, would they be included in Line 6?

[david rigby]

...if a participant separated from service prior to the beginning of the plan year, but had not been paid out, would they be included in Line 6?

Is that participant still a participant at EOY?

[Tom Poje]

unless I am misunderstanding what is being asked, if the person had a balance at the beginning of the year then the general rule of thumb is you count them in line 6.

they are a participant, maybe not active, but still a participant.

they disappear in line 7 (terminated and entitled to future benefits) because they have been paid out

[Lori H]

ok, so they terminated 300 years ago, never paid, but will be considered an eligible participant for Line 6 purposes.

[K2retire]

That's one of the reasons most documents allow you to force people out.

[Tom Poje]

the one exception is a 403(b) (if my memory serves me correctly) is that you can ignore those terms who quit before 1/1/09 because they might have old contracts, and they don't want to put a burden on you hunting down the info on these folks.