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FORM 5500-EZ... Number of Participants

fred7777
Level 2

Lines 5a(1) - 5b(2).... Not sure if I report "2" or "0" on each line. 

Have a One Participant Plan (owner/administrator and his spouse). No one else ever worked with the couple. Both are retired, the business is no longer active, and both the husband and wife have been receiving their RMDs for the past five years. There are no  more new contributions.

Aware of the $250,000 minimum requirement for reporting, so don't even bring that into this discussion. 

Do I report "0" or "2" Participants on Lines 5a(1) - 5b(2)?

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5 Comments 5
sjrcpa
Level 15

No need to ask twice.

https://accountants.intuit.com/community/proseries-tax-discussions/discussion/form-5500-ez/00/331646

How is "participant" defined in the instructions?


The more I know the more I don’t know.
fred7777
Level 2

Yes, sorry for the double post. Initially, I couldn't see my original post, so I thought I inadvertently canceled it. My bad...

Definition of "participant" on page 5 of Form 5500-EZ instructions is confusing to me. It list five categories for inclusion as "participant".

Category No. (1) states that active "participants are currently in employment covered by the plan". Because husband and wife are not "currently in employment" ... they are retired and receiving benefits...I interpreted this as them not being "active participants".

However, category No. (2) inclusion is for "Retired or separated participants receiving benefits under the plan".

The other three listed "inclusion categories" are definite "no"s.

So, I'm not sure if the the retired husband and wife who are no longer actively employed, but are receiving 401(K) benefits from the Plan, are "participants". 

Just want a simple yes or no answer. Please?? 

 

 

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Jim-from-Ohio
Level 12
Level 12

Yes

fred7777
Level 2

Thanks, Jim. So your "yes" means the retired husband and wife who are no longer actively employed, but are receiving 401(K) benefits from the Plan, are "participants", but inactive ones. 

So, my understanding is active means currently employed and making annual contributions… while inactive participants are retired and currently receiving RMDs.

All of that said, I will report the following:

Line 5a(1) ... 2  "Total participants at beginning of year"... because this includes active (none) and inactive (2).

Line 5a(2) ... 0  "Active participants at beginning of year". 

Line 5b(1) ... 2  “Total participants at end of year”.

Line 5b(2) ... 0  "Active participants at end of year”.

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sjrcpa
Level 15

That makes sense


The more I know the more I don’t know.