A:

Yes. An individual is considered an active participant even if his or her participation in the plan has been for only a short period.



It is the actual credit to the retirement plan that results in the active status, not necessarily the duration of the participation.



(For more, read Are You an Active Participant?)



This question was answered by Denise Appleby.



RELATED FAQS
  1. Does participation in a 401(k) plan prevent an individual from contributing to a ...

    No. An individual's participation in an employer-sponsored plan (including a 401(k) plan) does not affect his or her ability ... Read Answer >>
  2. What are my main rights as a 401(k) plan participant?

    Learn how under ERISA, 401(k) plan participants are guaranteed several important rights, including protections of their plan ... Read Answer >>
  3. What is the best retirement plan option for a physician with her own practice, employees ...

    It is very unlikely that you will find a qualified plan or an IRA-based plan that will allow the employer to exclude other ... Read Answer >>
Related Articles
  1. Retirement

    Can You Deduct Your IRA Contributions?

    We help you answer this important question, which is determined by whether you are considered an "active participant".
  2. Retirement

    Enticing Retirement Plan Participants to Save

    Getting participants interested, educated and enrolled in their retirement plan is the first step to long-term saving for a comfortable retirement.
  3. Financial Advisor

    401(k) Rollovers: The Tax Implications

    The tax rules for 401(k) rollovers can be simple or more complex, depending on which path you take.
  4. Investing

    Explaining the Participation Rate

    The participation rate is the percentage of civilians who are either employed or unemployed and looking for a job.
  5. Financial Advisor

    The Defined-Contribution Plan: A Flawed Concept

    After a career marked by loyalty to the firm, the promised pension plan benefits aren't materializing for many plan participants.
  6. Financial Advisor

    How to Piece Together a 401(k) Plan

    In the world of 401(k) investment lineups, more is not always better. Here's an overview of things you may want to include on your retirement plan. Or not.
  7. Financial Advisor

    Are Cash Balance Pensions the Best for Small Biz?

    Are cash balance pensions the right solution for your small business clients? Here's why they may or may not work for your firm.
  8. Retirement

    401(k): An Accidental Solution To The Retirement Problem

    The 401(k) is often a poor substitute for the defined-benefit plans it replaced, but there are steps you can take to make yours better.
  9. Retirement

    Is a Deferred Retirement Option Plan Right for You?

    Deferred retirement option plans are a lesser-known type of employer-sponsored retirement plan that may prove beneficial to certain types of workers.
  10. Investing

    401(k) Lawsuits: How Employers Are Protecting Themselves

    Some companies are making it harder for employees to sue over retirement fund problems. Here is what you need to know about the trend.
RELATED TERMS
  1. Participation Rate

    A measure of the active portion of an economy's labor force. ...
  2. Active Participant Status

    Active-participant status is a reference to an individual's participation ...
  3. Passive Activity

    Activity in which the taxpayer did not materially participate ...
  4. Plan Participant

    A plan participant either contributes into a pension plan or ...
  5. Material Participation Test

    A set of criteria that determines whether a taxpayer is a material ...
  6. Passive Income

    Earnings an individual derives from a rental property, limited ...
Hot Definitions
  1. Quadruple Witching

    The expiration date of various stock index futures, stock index options, stock options and single stock futures. All stock ...
  2. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  3. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  4. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  5. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  6. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
Trading Center