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Pension Resource

Treas. Reg. § 1.401(a)(26)-4

Testing former employees.
eCFR editorial change effective 2016-05-18 · current · last amended by T.D. 8891, 65 FR 44682, July 19, 2000
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(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).
Source credit, amendments & notes

[T.D. 8375, 56 FR 63416, Dec. 4, 1991, as amended by T.D. 8794, 63 FR 70338, Dec. 21, 1998; T.D. 8891, 65 FR 44682, July 19, 2000]

Treas. Reg. § 1.401(a)(26)-4 — Testing former employees. · eCFR editorial change effective 2016-05-18 · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr26-1.401%28a%29%2826%29-4&asof=2010-08-16 · printed Oct 16, 2026
On this page
  • (a) Scope.
  • (b) Minimum participation rule for former employees.
  • (c) Special rule.
  • (d) Excludable former employees
Implements
I.R.C. § 401 Qualified pension, profit-sharing, and stock bonus plans
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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Apr 1, 1997Mar 31, 1999CFR 1998 annual edition (revised as of 1998-04-01) run 127T.D. 8375, 56 FR 63416, Dec. 4, 1991View
Apr 1, 1999Mar 31, 2001CFR 2000 annual edition (revised as of 2000-04-01) run 127T.D. 8794, 63 FR 70338, Dec. 21, 1998View · Redline (sign in)
Apr 1, 2001Mar 31, 2006CFR 2005 annual edition (revised as of 2005-04-01) run 127T.D. 8891, 65 FR 44682, July 19, 2000View · Redline (sign in)
Apr 1, 2006currenteCFR editorial change effective 2016-05-18 run 2T.D. 8891, 65 FR 44682, July 19, 2000View · Redline (sign in)
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