Rev. Rul. 71-192

The coverage requirements of section 401(a)(3) of the Internal Revenue Code of 1954 are satisfied for an entire taxable year, either on the percentage basis under section 401(a)(3)(A) or on the basis of a nondiscriminatory classification under section 401(a)(3)(B), if such requirements are met on at least one day in each quarter of the taxable year. See section 401(a)(6) of the Code and 1.401-3(g) of the Income Tax Regulations. For example, assuming that returns are filed on a calendar year basis, if the percentage basis is applicable and on the first day of the taxable year 1,000 employees have at least the minimum service requirements prescribed by section 401(a)(3)(A) of the Code, it is sufficient if not less than 700 employees are eligible to participate and not less than 80 percent of those eligible are actually participating on that day even though employee turnover changes the percentages to less than 70 and 80 on all other days prior to April 1 of the same year. The percentage requirements will again have to be met on at least one day during the quarter commencing with April 1, and so on for the other quarters during the year.