80 -120 Rule

80/120 Rule

This ruling allows plans with between 80 and 120 participants, as of the 1st day of the plan year, to file the Form 5500 in the same category ("large plan" or "small plan") as indicated on the prior year Form 5500 filing. 

The number of participants dictates whether you have a large or small plan.  Employees become includable as "participants" (per the instructions to the Form 5500) on the date which the employee becomes eligible to participate - regardless of whether they elect to participate.

The participant count must include (1) actively participating employees, (2) retired, deceased, or separated employees who still have assets in the plan and (3) all eligible employees who have yet to enroll or have elected not to enter the plan.


The table below illustrates most possibilities:

# of eligible participants on 1st day of the plan year

 

Financial schedule filed with prior year Form 5500

 

Options for current year Form 5500

 

Audit required?

             

<80

 

Does not matter

 

Small Plan - Schedule I

 

No

             

80-99

 

Small Plan - Schedule I

 

Small Plan - Schedule I

 

No

   

Large Plan - Schedule H

 

Either - Sch H or I

 

Optional*

             

100-119

 

Small Plan - Schedule I

 

Either - Sch H or I

 

Optional*

   

Large Plan - Schedule H

 

Large Plan - Schedule H

 

Yes

             

>120

 

Does not matter

 

Large Plan - Schedule H

 

Yes

* Audits are always required if you elect to file as a large plan using Schedule H.  File Schedule I to avoid the audit requirement in these circumstances.

Still unsure if your retirement plan needs an audit?  Contact us for a second opinion or an independent review of your situation. 

 


Tax Due Dates