Participant counts are a key component of the Form 5500 and generate the most questions regarding how to complete the form. Below is a roadmap to help you understand the data points used for this section of the Form 5500. We have also included Wrangleās default reporting methods if the participant section is left blank in the dashboard.
Basics
| Line in the 5500 | Who Is Counted for a Non-Severance/Regular Plan |
|---|---|
| Line 5 | Enrolled (active) employees + COBRA/ex-employees + retirees (if applicable) as of the first day of the ERISA Plan Year (EPY) |
| Line 6a1 | Enrolled (active) employees [excluding COBRA/ex-employees and retirees] as of the first day of the EPY |
| Line 6a2 | Enrolled (active) employees [excluding COBRA/ex-employees and retirees] as of the last day of the EPY |
| Line 6b | Enrolled COBRA/ex-employees and retirees as of the last day of the EPY |
| Line 6c | Retired or former employees entitled to future benefits ā typically used for pension plans |
Final Report
| Line in the 5500 | Who Is Counted for a Non-Severance/Regular Plan |
|---|---|
| Line 5 | Enrolled (active) employees + COBRA/ex-employees + retirees (if applicable) as of the first day of the ERISA Plan Year (EPY) |
| Line 6a1 | Enrolled (active) employees [excluding COBRA/ex-employees and retirees] as of the first day of the EPY |
| Line 6a2 | 0 employees at the end of the Plan Year |
| Line 6b | 0 COBRA participants and retirees covered by the plan at the end of the Plan Year |
| Line 6c | 0 former employees entitled to enroll in the plan |
Final Report Due to Claim Run-Out Period
You would have zero participants at the end of the Plan Year, as shown above. However, there are two approaches for reporting Lines 5 and 6a1.
Reporting Method 1
Use the enrollment count listed at the end of the Plan Year from the previous filing.
Reporting Method 2
Use the enrollment count from the benefit remaining with outstanding claims to be processed, such as a self-insured medical plan. Some plan sponsors may instead choose to report only the number of participants tied specifically to the remaining run-out claims.
Example
Plan 501 included medical, dental, and life benefits. There were 150 employees enrolled in the life benefit during the prior year. The benefit with remaining run-out claims was the medical plan, which had 75 enrolled participants as of January 1. Of those 75 participants, only 10 still had claims remaining to be processed.
Some plan sponsors may choose to report 150 participants for the beginning of the Plan Year. Others may choose to report 75 or even 10 participants. At Wrangle, we defer to the Plan Sponsorās preference. The Form 5500 instructions do not provide specific guidance on this matter.
This distinction generally only becomes significant for plans funded through a trust. If the participant count falls below 100, an IQPA report/audit may not be required.
Severance-Only Plans
| Line in the 5500 | Who Is Counted for a Severance-Only Plan |
|---|---|
| Line 5 | All eligible employees at the beginning of the Plan Year |
| Line 6a1 | All eligible employees at the beginning of the Plan Year |
| Line 6a2 | All eligible employees at the end of the Plan Year |
| Line 6b | Ex-employees covered by the severance package |
| Line 6c | Ex-employees who could be covered by the severance package |
Wrangleās Standard Reporting Method When the Participant Section Is Not Completed
| Line in the 5500 | Who Is Counted for a Non-Severance/Regular Plan |
|---|---|
| Line 5 | Use the prior year ending count |
| Line 6a1 | Use the prior year ending count |
| Line 6a2 | Use the highest enrollment count from the schedules, particularly from a noncontributory benefit such as life, LTD, or EAP. If no employee-only count is provided on the schedules, we will use the highest participant count divided by 2.35, which is the IRS āsnapshotā method used to estimate participant counts when no other source is available. |
| Line 6b | Left blank unless a health Schedule A (medical, dental, or vision) includes the COBRA count |
| Line 6c | Left blank |
Overall, never hesitate to ask your Wrangle team if you feel uncertain or need clarification. We are here to help. For further information, please reach out to Ann McAdam at info@wrangle5500.com.