Ch. 24 Simplified Employee Pension Flashcards Preview

Employee Benefit Final > Ch. 24 Simplified Employee Pension > Flashcards

Flashcards in Ch. 24 Simplified Employee Pension Deck (15):
1

Simplified Employee Pension

an employer-sponsored plan in which employer contributions are made to participating employees' IRAs

2

Contributions are much ____ than traditional IRAs

higher

3

When is it indicated?

1. want simpler, less costly qualified plan
2. when it is too late to adopt a qualified plan since qualified plans must be adopted before the end of the plan year

4

only ____ can contribute

employers

5

6 advantages

1. not complicated and inexpensive
2. portable benefits
3. funding flexibility
4. benefit from positive investment
5. before 1/1/97, permits salary reduction contributions by employees
6. can be adopted at any time up to the tax return filing date

6

3 disadvantages

1. not reliable as stand-alone retirement plan
2. annual contribution may be restricted to lesser amount
3. distributions do not qualify for the special 10 year averaging rule

7

employees are ___ vested

100%

8

The plan must cover all employees who are at least ____ and have worked ____ out of the preceding 5 years

21;3

9

are part time employees included in the count?

yes

10

contributions need not be made for employees whose earnings were less than ____

$550

11

Are there minimum funding requirements?

no

12

the employer can make or omit contributions in any year ____ tax consequences

without

13

The plan can exclude _____ employees if retirement benefits have been the subject of good faith bargaining

union

14

how are distributions treated in a a SEP?

life a traditional IRA

15

Who can an SEP cover?

sole proprietors or partners as well as a regular employees