(a) Scope. This section applies to any defined benefit plan that benefits former employees in a plan year within the meaning of § 1.401(a)(26)-5(b) and does not meet one of the exceptions in § 1.401(a)(26)-1(b).
(b) Minimum participation rule for former employees. Except as set forth in paragraph (c) of this section, a plan that is subject to this section must benefit at least the lesser of:
(1) 50 former employees of the employer, or
(2) 40 percent of the former employees of the employer.
(c) Special rule. A plan satisfies the minimum participation rule in paragraph (b) of this section if the plan benefits at least five former employees, and if either:
(1) More than 95 percent of all former employees with vested accrued benefits under the plan benefit under the plan for the plan year, or
(2) At least 60 percent of the former employees who benefit under the plan for the plan year are nonhighly compensated former employees.
(d) Excludable former employees—(1) General rule. Whether a former employee is an excludable former employee for purposes of this section is determined under § 1.401(a)(26)-6(c).
(2) Exception. Solely for purposes of paragraph (c) of this section, the rule in § 1.401(a)(26)-6(c)(4) (regarding vested accrued benefits eligible for mandatory distribution) does not apply to any former employee having a vested accrued benefit. Thus, a former employee who has a vested accrued benefit is not an excludable former employee merely because that vested accrued benefit does not exceed the cash-out limit in effect under § 1.411(a)-11(c)(3)(ii).
The preliminary Code is a preliminary release of the Internal Revenue Code of 1986 (the "Code") by the Office of the Law Revision Counsel and is subject to further revision before it is released again as a final version. The source of the preliminary Code used in TouchTax is available here: https://uscode.house.gov/download/download.shtml. The Code is a consolidation and codification by subject matter of the general and permanent laws of the U.S. prepared by the Office of the Law Revision Counsel of the U.S. House of Representatives. The Treasury Regulations are a codification of the general and permanent rules published in the Federal Register by the departments and agencies of the federal government. The version of the Treasury Regulations available within TouchTax is part of the Electronic Code of Federal Regulations which is not an official legal edition of the Code of Federal Regulations but is an editorial compilation of CFR material and Federal Register amendments produced by the National Archives and Records Administration's Office of the Federal Register (OFR) and the Government Publishing Office. The source of the CFR used in TouchTax is available here: https://www.govinfo.gov/bulkdata/ECFR/title-26. Those using TouchTax for legal research should verify their results against the printed versions of the Code and Treasury Regulations. TouchTax is copyright 2024 by Com-Lab (Mobile). Learn more at http://touchtax.edrich.de.