True or false; if a plan has been filing as a small plan and its participant level rises above 99 but not above 120, it may continue to file as a small plan for 5 years.

A plan that has been filing as a small plan generally is defined as one with fewer than 100 participants at the beginning of the plan year. If the number of participants rises above 99 but remains below 120, the plan can still qualify as a small plan for a limited period of time. However, once the participant count exceeds 100, there are changes in reporting requirements, and the plan cannot continue filing as a small plan indefinitely.

The rule allows the plan to retain its small plan filing status, but only under specific conditions as determined by the IRS. Specifically, if a plan experiences growth in participants, it may be treated as a small plan for up to 5 additional years as long as it meets the qualification criteria, which can include factors like submitting Form 5500 with a lack of significant operational changes. This means that simply crossing the threshold above 99 does not automatically disqualify a plan from small plan status for a long duration.

Hence, the assertion is false because it implies an indefinite continuation of small plan status which is not accurate; the plan must adhere to specific criteria and cannot just automatically assume that status for a lengthy term, especially if participant numbers increase beyond set limits.