80-120 Rule

[coleboy]

Hi,

Can someone please clarify the 80-120 rule? New takeover client. For 2013, beginning count was 105, ending 112. For 2014, beginning 112, ending 102.

Won;t they need to do a Sched. H for 2015?

[Bill Presson]

Couple of things (I'm assuming calendar year):

1. What did they file in 2014?

2. How many participants will the plan have on January 1, 2015? Since it's likely an entry date, you can't just say 102, though it's possible.

[ETA Consulting LLC]

No. When they actually start below 100, and therefore use one of the small forms; they are allowed to remain using that small form until their beginning account actually "EXCEEDS" 120.

The 80 is like a "will never happen". If you're above 100 AND using the Schedule H, then you may continue to use the Schedule H in the event your number falls below 100 (like why would you ever want to). However, should it actually reduce below 80, then you must move to the small form and save yourself some audit fees.

Good Luck!

"Edited to say: Bill does make the correct point that you must actually count the number of participants on January 1, 2015 to see if it exceeds 120."

[david rigby]

See page 8 of the 2014 instructions.
http://www.dol.gov/ebsa/pdf/2014-5500inst.pdf

[coleboy]

They have been filing the Sched. I for 2013 and 2014. Their beginning count balance will be just over 100 employees but no less than that. So for 2013 and 2014, the beginning counts were over 100.

Can they still just file a Sched. I for 2015? I don;t think they will ever drop below 100 but it may be a couple of years before they go over 120 employees.

[david rigby]

The point of the 80-120 rule (see link above), is they may file whatever form they filed last year.

[My 2 cents]

The point of the 80-120 rule (see link above), is they may file whatever form they filed last year.

If they started out below 100, their first year filing would have been either a 5500-SF or a 5500 with a Schedule I. They can stay that way forever if they never get to 120.

If they do bump up over 120, however, it is time for a Schedule H and an accountant's opinion. It will stay that way until they get down to below 100. As noted, if between 80 and 120, they may file the same as last year if they want. Otherwise their filing category breaks at 100.

[BG5150]

They have been filing the Sched. I for 2013 and 2014. Their beginning count balance will be just over 100 employees but no less than that. So for 2013 and 2014, the beginning counts were over 100.

Can they still just file a Sched. I for 2015? I don;t think they will ever drop below 100 but it may be a couple of years before they go over 120 employees.

If the fact pattern is right (that they were able to file as a small plan for 2013-14, and if the opening count for '15 is 120 or less, they can continue to file as a small plan.

(Why did they file a 5500 with Sched I instead of an SF? Is it because of non-qualifying assets?)

[coleboy]

Thank you for all of your replies. For some reason, I was under the impression that filing the same as in the previous year was only a one time deal once you reached over 100 lives.That is, one could only use it for the first year that they were over 100 lives then had to switch over to the Sched. H after that first year.

Thanks again for the clarification.

[Andrea]

I know it has been a while since any activity on this topic, but I have a related question that I cannot find an answer to.  Scenario:  New unfunded welfare plan with less than 100 participants at BOY - no need to file any Form 5500, right?  But then we move to the next year and the BOY count is 102.  Do they have to file as a large plan even though in the prior year they had less than 100 participants?  Can you file a Form 5500-SF for the first year even though it is not required (just so you could file 5500-SF in the following year)?