Large Plan or Small Plan - 80-120 Rule

[KateSmithPA]

If a plan has filed a Form 5500 in the past and has never been a large plan, then they may go up to 120 participants before they have to file as a large plan.

A 403(b) has filed Form 5500 in the past, but it was not required to file as either a large or a small plan and there was no Schedule I or Schedule H required.

In 2009, does the 403(b) plan still get to use the 80-120 rule?

Thank you.

Kate Smith

[Guest mike webb]

You would treat the 403(b) plan in 2008 as if it had been subject to the new rules to determine whether it is a large or small plan for filing purposes:

From the 5500-SF Instructions:

Who May File

If your plan is required to file an annual return/report, you may file the Form 5500-SF instead of the Form 5500 only if you meet all of the eligibility conditions listed below.

1. The plan (a) covered fewer than 100 participants at the beginning of the plan year 2009, or (b) under 29 CFR 2520.103-1(d) was eligible to and filed as a small plan for plan year 2008 and did not cover more than 120 participants at the beginning of plan year 2009 (see instructions for line 5 on counting the number of participants);

Note. If a Code section 403(b) plan would have been eligible to file as a small plan under 29 CFR 2520.103-1 (d) in 2008 (that is, the plan was eligible to file in the previous year under the small plans requirements and has a participant count of less than 121 at the beginning of the 2009 plan year), then it can rely on 29 CFR 2520.103-1 (d) to file as a small plan for the 2009 plan year.

Michael A. Webb

Vice President, Retirement Practice

Cammack LaRhette Consulting

mwebb@clcinc.com

403(b) Curriculum LinkedIn Group: http://www.linkedin.com/groups?mostPopular...rk=myg_ugrp_ovr

[Guest sugar daddy]

You would treat the 403(b) plan in 2008 as if it had been subject to the new rules to determine whether it is a large or small plan for filing purposes:

From the 5500-SF Instructions:

Who May File

If your plan is required to file an annual return/report, you may file the Form 5500-SF instead of the Form 5500 only if you meet all of the eligibility conditions listed below.

1. The plan (a) covered fewer than 100 participants at the beginning of the plan year 2009, or (b) under 29 CFR 2520.103-1(d) was eligible to and filed as a small plan for plan year 2008 and did not cover more than 120 participants at the beginning of plan year 2009 (see instructions for line 5 on counting the number of participants);

Note. If a Code section 403(b) plan would have been eligible to file as a small plan under 29 CFR 2520.103-1 (d) in 2008 (that is, the plan was eligible to file in the previous year under the small plans requirements and has a participant count of less than 121 at the beginning of the 2009 plan year), then it can rely on 29 CFR 2520.103-1 (d) to file as a small plan for the 2009 plan year.

Michael A. Webb

Vice President, Retirement Practice

Cammack LaRhette Consulting

mwebb@clcinc.com

403(b) Curriculum LinkedIn Group: http://www.linkedin.com/groups?mostPopular...rk=myg_ugrp_ovr

So for example, using 29 CFr 2520.103-1(d) if a plan's total number of participants at the beginning of the 2009 plan year was 94 (Quest 5a on 5500SF) total number of participants at the end of the plan year was 102 (quest 5b) and the total number of participants with account balances at the end of the plan year was 94 (quest 5c), they would NOT need an audit for the 2010 plan year, since they are under 120?