Form 5500 Participant Count Question

[metsfan026]

Having a debate with someone in my office.

For the participant count on the Form 5500, if someone becomes eligible do you include them for the Beginning of the Year count (for Active and Total Participants)?  Or do you not, so the number of participants at the beginning of the year matches the number for the ending of the year of the previous Form 5500?

I know it's minor, just want to make sure.  Thanks!

[Bri]

You are indeed meant to add the number of January 1 newbies to the prior EOY count.  And if that means 118 now turns into 121, guess what....

[metsfan026]

2 minutes ago, Bri said:

You are indeed meant to add the number of January 1 newbies to the prior EOY count.  And if that means 118 now turns into 121, guess what....

What I've always done.  Thanks!

[Peter Gulia]

And as Bri's illustration suggests, a consequence might matter.

[Paul I]

The details in the 5500 instructions about beginning of year counts can make for a more lively debate in the office:

There are three lines on the 5500 that ask for a count at the beginning of the plan year:

• Line 5 Total number of participants at the beginning of the plan year
• Line 6a(1)  Total number of active participants at the beginning of the plan year
• Line 6g(1) Number of participants with account balances as of the beginning of the plan year (only defined contribution plans complete this item)

There are some wrinkles.  Alternate payees entitled to benefits under a QDRO are not counted.

For Line 5, include active participants, retired or separated participants who are receiving benefits, other retired or separated participants entitled to future benefits, and deceased individuals who have one or more beneficiaries who are receiving benefits or are entitled to receive benefits (e.g., a deceased individual counts as 1 even though there may be 2 or more beneficiaries receiving benefits.)

For Line 6a(1), include only participants are active (currently employed and have or are entitled to have a benefit .

For Line 6g(1), include only participants who are in a defined contribution plan, who are counted for purposes of Line 5, and who have an account balance on the beginning of the plan year.

None of these reference a prior year count.  That being said, Line 6g(1) will almost always equal the prior year's Line 6g(2) - end of year count of participants with balances.