Form 5500 Question #7

[Guest RMV]

On the Form 5500, question 7, we are ask to indicate number of "active participants" I am confused with the instructions, could someone help explain who I need to include?

Would active participants include all eligible participants during the plan year, even if termed prior to PYE, as well as termed participants (prior to PYB) who have an account balance and have not incurred a break in service? What about participants, who terminated, cashed out, were not fully vested and still have not incurred a break in service (those who forfeited and still have rights to those monies)?

On line 7c, we are asked to indicate retired or separated participants entitled to future benefits. Is it possible that these participants are also in the "Active Participants"? If so, why are we subtotaling and adding these two groups together on line 7d? Wouldn't we be double counting?

I know I am missing something, if not plenty, could someone let me know how they calculate? Thanks in advance.

[KIP KRAUS]

RMV:

I have always only included in active employees those employees at plan year end that are cosidered actively working and who have an account balance, whether curently contributing or not.

As for retired/separated persons entitled to future benefits I include all terminated former employees at plan year end that continue to have an accoutn balance.

I don't intrepret the new forms as requiring anything different.

[Guest Emiliano]

Line 7 applies to the participant count as of the end of the plan year (NOT during the year). Those participants who terminated employment during the plan year would not be considered active as of the end of the plan year and would be included in 7b, 7c or 7e.

The key phrase: "as of the end of the plan year".

[Guest RMV]

Thank you both. One more question - is it active employee or active participant at the end of the plan year, do they have to meet eligibility into the Plan, or just be employed and earning or retaining credited service? Thanks again.

[Greg Judd]

For the purpose of responding to these headcount questions, a "participant" is essentially anyone eligible for the plan in question. For example, in the case of a 401(k) plan with no automatic enrollment feature, there's no need to exclude those eligible who aren't currently contributing.