Participant count for terminated 401(k) plan

[jkharvey]

401k plan terminates during 2015. For purposes of the participants at beginning of year count for 2016 would the employees who were not deferring (they have no account balances) and were counted as "active" in years before the plan terminated because they had ability to defer, still considered "active" for 5500 and audit purposes since they no longer have an ability to defer?

[Bill Presson]

If they were active on the first day of the year, then they are active for the 5500 count and audit purposes.

[jkharvey]

Does the fact that the plan terminated and no more benefits accrue and no one may elect to defer mean that the employees who never deferred would still considered to be "earning or retaining credited service under the plan"?

[Kevin C]

For a 2016 beginning of year participant count for a plan that terminated in 2015, I would say the zero balance people are not included. Plan termination is a distributable event (assuming no alternative defined contribution plan) and unless you have really strange plan language, those with zero balances are deemed to be distributed when the distributable event occurs. For those with balances, they stop being participants when they are paid in full after the plan termination.

[Bill Presson]

Kevin C is correct. I misread the OP message and thought it terminated in 2016. Sorry about that.