Data for a plan in 2012: Location A B C D Number of employees 41 19 15 XThe plan covers all employees of locations B and D only. Location C is collectively bargained.No employees terminated during 2012 and none are statutorily excludable from the plan. The plan covers at least one HCE. What is the minimum number of employees that must be in Location D so that the plan will pass the participation requirement of IRC section 401(a)(26)?
A)Less than 9
B)9 but less than 14
C)14 but less than 19
D)19 but less than 24
E)24 or more

Question

Quizplus · Accepted Answer

To satisfy IRC section 401(a)(26), a plan must cover the lesser of 50 employees or 40% of employees. Locations B and D have 19 + X employees. To meet the 40% requirement, (19 + X) * 0.4 must be at least 15 (since 41 + 19 + 15 + X = 75 + X total employees). Solving for X gives a minimum of 9 employees in Location D.

Data for a Plan in 2012: Location a B C