§ 1.401(a)(26)-4(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).
§ 1.401(a)(26)-4(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:
§ 1.401(a)(26)-4(b)(1) 50 former employees of the employer, or
§ 1.401(a)(26)-4(b)(2) 40 percent of the former employees of the employer.
§ 1.401(a)(26)-4(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:
§ 1.401(a)(26)-4(c)(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
§ 1.401(a)(26)-4(c)(2) At least 60 percent of the former employees who benefit under the plan for the plan year are nonhighly compensated former employees.
§ 1.401(a)(26)-4(d) Excludable former employees
§ 1.401(a)(26)-4(d)(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).
§ 1.401(a)(26)-4(d)(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).