Participant Count for form 5500

[EBDI]

This is a 401k plan that allows immediate eligibility for 401k deferrals and a 1 year wait for the employer profit share. Two employees were hired in Dec. 2012 and received their first compensation in Jan. 2013. For the 2012 form 5500 are they considered active participants since they are eligible, even though they could not have deferred due no compensation received? I think they are included as active participants, but the software I use is not including them.

[PensionPro]

Did you include them on the 2012 ADP test?

[EBDI]

They were not included in the ADP test because they did not have any compensation. I wasn't sure if for the same reason they would not be included in the active count for the 5500. Also, including them would not impact the ADP test as the ADP test always passes. This is a non profit with no HCE.

[BG5150]

Are you straddling the audit/no audit line?

If not, I don't think it matters that much. If the plan get audited, and they bring it up, then just tell them why you filled it out the way you did. I doubt they'll give you grief.

[EBDI]

They are well over 100 employees and do have an audit. I am trying to get it right to avoid having the auditor call me on it!

[BG5150]

I would NOT include them. If the auditor insists on having them in there, put them in there.

[EBDI]

The more I think about it, I agree they should not be included. Thanks for the reply.

[PensionPro]

I would go with the software and not treat them as active employees in 2012 because they could not have deferred or received a PS.

[BG5150]

And change the entry dates to monthly.