Determining number of participants for audit purposes

[Lori H]

403 has immediate eligibility for deferral purposes, but a 2 year waiting period for match. Let's say 125 are eligibile to defer but only 100 are eligible to receive a match at plan year end. Would an audit be required? My thinking is if the plan only had employee deferrals it would not be subject to ERISA, therefore no audit requirements. Thanks.

[ETA Consulting LLC]

You have identified the major anomaly for these plans with respect to ERISA status. Since ERISA status applies to the individual accounts as opposed to "the plan", you're not required to report the accounts that are not subject to ERISA. However, the actual "participant count" on the Form 5500 applies an IRS rule where you count anyone who is actually "eligible to defer" in the count. This is regardless of whether their account is deferral only and not subject to ERISA. This, in your instances, induces an audit requirement.

Good Luck!