Want to test my understanding:

A non-contributory DB plan has been frozen for couple of years and as a result there are participants with benefits and employees who have met the eligibility requirement to enter the plan but have zero benefit because they became eligible after the plan was frozen.

Under the law, are the eligible employees with zero benefit considered "participants" for Form 5500 participant count? Per 5500's instructions:

Active participants include any individuals who are currently in employment covered by a plan and who are earning or retaining credited service under a plan.

I believe they are participants because they have service/participation credits even though they don't accrue any benefit.

Also, per the instructions to PBGC Form 1 filing, these employees are participants for 5500 but not for PBGC Form 1.

This has become an issue because the plan would not be a small plan if the active employees who have met the eligibility requirement to enter the plan but have zero benefits are considered "Participants".

They are participants for the 5500 count. When the benefits were frozen, plan entry should have been frozen too.

I agree with my piscine colleague. Note that it's not too late to close the barn door before any more horses come inside. Is the plan eligible for the 80/120 rule?

Ok, what's the 80/120 rule? This is my only plan in the 100 or so count range and this is the first year it went over 100 (last year). So I haven't done much reading on the large plan issues.

If your plan was a "small plan" for 2006 (i.e. schedule I instead of schedule H) and this year you have less then 120 participants, you can file as a small plan for 2007. From the 2007 5500 instructions:

(1) 80-120 Participant Rule: If the number of participants reported on line 6 is between 80 and 120, and a Form 5500 was filed for the prior plan year, you may elect to complete the return/report in the same category (‘‘large plan’’ or ‘‘small plan’’)
as was filed for the prior return/report. Thus, if a return/report was filed for the 2006 plan year as a small plan, including the
Schedule I if applicable, and the number entered on line 6 of the 2007 Form 5500 is 100 to 120, you may elect to complete
the 2007 Form 5500 and schedules in accordance with the instructions for a small plan.

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...............If your plan was a "small plan" for 2006 (i.e. schedule I instead of schedule H) and this year you have less then 120 participants, you can file as a small plan for 2007. From the 2007 5500 instructions:

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Thanks very much. I should read the instructions for a change .

Thanks very much. I should read the instructions for a change .


Or somehow deduce the existence of such a rule.