Who's a "participant" on the 5500?

The Form 5500 asks for total number of participants in a plan, but it's not calculated the way you think it would be. 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.

Let's talk about these in more detail and explore some things you can do to keep your plan lean and mean in the participant count.

1. Actively participating employees: That makes sense. They have an account and put money in it or did sometime during the year. We like people saving for retirement!

2. Terminated employees that still have assets in the plan: That number could add up fast if your organization has high turnover. Make sure you take advantage of small balance cash-outs and rollovers to help, or get your Retirement Planologist to make some outgoing phone calls to explain the options for removing their money from the plan that those folks have, so it's back on their radar. They've probably forgotten they have an account in the plan. (No, seriously. It's either that or inertia got them.)

3. Eligible but not participating: Ouch. This is where your education programming or automatic enrollment comes in handy. This item also hurts your testing if you have opted not to have a safe harbor plan design, so give it proper attention and work hard to encourage people to save so they can have the luxury of deciding how they spend their time later in life!

Need innovative ideas on how to improve any of these in your plan? Reach out.