403(b) Audit

[oldman]

An ERISA 403(b) plan is required to file audited financial statements with their 5500 if they have 100 or more participants. A participant is defined as: (1) anyone eligible to participate in the plan even if they are not deferring; or (2) terminated participants who still have money in the plan.

A plan excludes employees who do not elect to to make elective deferral contributions of more than $200 for the plan year. Would these excluded employees be counted as participants or not for purposes of the audit?

[Flyboyjohn]

I think YES they are participants for audit count purposes, otherwise wouldn't you be contending that your "elgibile but contributing" group would be zero?

In essence they're imposing a $200 minimum deferral and not really an "exclusion" from the plan.

[Kevin C]

You might want to take another look at 1.403(b)-5(b)(3)(i). Under it, the plan can require that if you are going to defer, you have to elect to contribute at least $200 /yr. However, electing to defer less than $200 per year is not a category that can be excluded from the plan under 1.403(b)-5(b)(4). They are still participants.