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Long term part-time employees/participant count


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I realize it won't be an issue right away - but does anyone know if the long term part-time employees contributing will need to be counted as participants w/balances for 5500/5500-SF purposes?  I know they can be excluded from testing, but haven't been able to find information as far as the 5500 return counts. 

Thanks in advance!

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After reading through the Federal Register I found the appropriate section and it appears that the long term part-time employees who elect to contribute and therefore have plan balances will, in fact need to be counted for 5500 purposes.  Depending on the industry and how LTPT interest shakes out, we could end up with some clients who will actually go the opposite way and will now need an audit.  (previously under 100 and eligible for audit waiver, now over with the LTPT with balances included).

I guess since it's down the road a bit, no sense in worrying right now :(


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If part-time employees might put a plan over a threshold and call for engaging an independent qualified public accountant, is it feasible to divide participations into two (or more) plans?

If an employer anticipates a meaningful number of employees will become eligible because of § 401(k)(2)(D)(ii), one might—to facilitate efficient coverage and nondiscrimination testing, or for other plan-administration reasons—organize two distinct plans:

(1)     a plan for those who meet eligibility conditions without any to meet § 401(k)(2)(D)(ii), and

(2)     another plan for those who are eligible only by meeting eligibility conditions provided to meet § 401(k)(2)(D)(ii).

One would design and administer the plans to meet required aggregations and disaggregations, and to rely on only permitted aggregations and disaggregations.

Or is this where BenefitsLink mavens remind me I don’t know enough about how services are provided to small plans?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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  • 3 weeks later...

Peter - For our small employers; I suppose one thought would be weighing the cost of the audit to the cost of maintaining two or more qualified plans.  I don't know what others think but I'm thinking that because the auditors are going to lose plan audits on some plans (in my world anyway) they might raise their fees for those they still have or for any new ones with the situation above where the client's plan is now in the audit realm.   We are exclusively in the small company plan market and our clients seem to be cost conscious above all else the majority of the time 🙂!


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