80/120 Rule

[lcollins300]

We have a plan that had 121 participants in 2018 so we had to file as a large plan with audit.  In 2019 the participant count fell to 113 (but we found out this year that number was overstated due to employees really terminating on 12/31/2019 that weren't reported as such on the 2019 census).  These same employees did not have account balances so if we were to amend the plan's 2019 5500 filing the participant count would be less than 100.  As of PYB 2020 the participant count stands at 80.  

Not sure I'm understanding the 80/120 rule.  Do we have to continue to file 5500 with large plan audit for 2020 or can we go back to filing the 5500-SF?  This plan also terminated 12/15/2020 and paid out all assets by 12/31 so we really don't want them to have to do another plan audit if not needed.  Thank you anyone for clarifying.

[C. B. Zeller]

The 80-120 rule is always optional. Once you are below 100 participants, you can file on SF even if you filed the full 5500 the previous year.

[BG5150]

28 minutes ago, C. B. Zeller said:

The 80-120 rule is always optional.

Nope.  If participants are under 80, you MUST file as a small plan.

[BG5150]

You may run into a problem though, if your opening participant balance at BOY 2020 is less than EOY 2019.  That number cannot go down, only up (new participants entering 1/1).

Might have to amend the 2019 filing with the correct participant count.  You can leave the audit.

[C. B. Zeller]

34 minutes ago, BG5150 said:

Nope.  If participants are under 80, you MUST file as a small plan.

If participants are under 80 then the 80-120 rule doesn't apply.

[lcollins300]

Thank you all!  May have to amend the 2019 to fix end of year count.