26 CFR §1.401(a)(26)-4

1. (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).
2. (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. (1)50 former employees of the employer, or
   2. (2)40 percent of the former employees of the employer.
3. (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. (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. (2)At least 60 percent of the former employees who benefit under the plan for the plan year are nonhighly compensated former employees.
4. (d)Excludable former employees
   1. (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. (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).