plan year ending in the preceding calendar year. (3) Exception for certain small and new employers (A) In general The term covered employer does not include an employer for a calendar year if the employer— (i) did not employ more than 10 employees who received at least $5,000 of compensation (as defined in section 3401(a)) from the employer for the preceding calendar year, (ii) did not normally employ more than 10 employees on a typical business day of the preceding calendar year, or (iii) was not in existence at all times during the calendar year and the preceding calendar year. (B) Operating rules In determining the number of employees for purposes of subparagraph (A)— (i) rules consistent with any rules applicable in determining the number of employees for purposes of section 408(p)(2)(C) and section 4980B(d) shall apply, (ii) all members of the same family (within the meaning of section 318(a)(1)) shall be treated as 1 individual, and (iii) any reference to an employer shall include a reference to any predecessor employer. (4) Exception for governments and churches The term covered employer does not include— (A) a government or entity described in section 414(d), or (B) a church or a convention or association of churches which is exempt from tax under section 501. (5) Coordination with qualifying State-facilitated automatic IRA programs (A) In general In the case of an employer all of the employees of which are employed in a single State, if such State maintains or facilitates a qualifying State-facilitated automatic IRA program, any employer which is required to participate in such State program is not a covered employer for purposes of this section. (B) Employers with employees in multiple States In the case of an employer which employs employees in more than 1 State— (i) if each such State maintains or facilitates a qualifying State-facilitated automatic IRA program, the employer participation rules of each such program (and of subparagraph (A)) apply, respectively, to employees employed in such State,