I think I know the answer to this one but am hoping for a different one

I have a formerly large plan that terminated and is in the process of distributing all accounts. However, they missed a small portion of 4 participant's accounts and the plan still had a balance as of the end of 2002 (of $10.78).

Do I need to file a Schedule H for this plan since there is still a remaining balance or is there any way to file a Schedule I? Also, I am assuming if a Schedule H is required, then they will need an audit attached... is this correct?

The money has since been distributed and I will be filing the final 5500 shortly. Do they need an audit for the few months in 2003 as well?

Thanks,

Rachel

Did you have fewer than 100 participants at the beginning of 2002? That's your acid test. If so, complete a Schedule I. As for the exemption from an audit . . . well, it depends. That's an issue to be taken up with the CPA based on other factors, (including the number of participants at the beginning of the plan year).

At any rate, if you had assets in 2003, yes, you'll file for 2003. Clearly, you will be completing a Schedule I.

How do I figure participants for a plan that terminates? These employees still work for the company but had been distributed from the plan since it terminated....

I have 4 employees at the beginning of the year that still had very small dollar amounts in their accounts. Would these 4 be considered the participants?

I am confused on how the count works for plans that are terminated. Technically, the employees meet requirements but the plan is no longer operating...

Thanks again,

Rachel

Rachel - I think the key here is how many PARTICIPANTS were in the plan as of 01/01/2002? It really doesn't have anything to do with the plan termination. How many participants had balances or, if 401(k), were eligible to participate, even if they did not defer? That count will answer your question....whether over or under 100.

pmacduff,

I thought if a plan had filed as a large plan it had to drop below 80 before it could file as a small plan (80-120 rule)????

As I read the instructions, being between 80 and 120 participants allows you to elect to complete the same return you completed the prior year. So a large plan that dropped to 80 participants could still elect to file as a large plan, but is allowed to file as a small plan since the count is less than 100.