Chapter 8: Installation, Administration, and Termination of Qualified Plans

Question 1

how soon before mailing a determination letter to the IRS does the employer need to make participants aware of the newly established plan?

Answer 1

employees must be notified between 10 and 24 days before mailing the determination letter

Question 2

how soon must a Summary of Plan documentation be furnished to each participant after the establishment of a plan?

Answer 2

120 days

Question 3

when is Form 5500 Not required

Answer 3

if employer has only one participant with assets of 250K or less.

Question 4

When is Form 5500 EX required

Answer 4

if plan has one participant and total assets exceed 250K.

Question 5

Form 5500-SF requirements

Answer 5

1. plan must have fewer than 100 participants
2. must not be a multiemployer plan
3. hold no employer securities
4. have all assets invested in investments with a readily determinable value

Question 6

employers contribute to which qualified plan types?

Answer 6

money purchase pension plans, ESOPs, and profit sharing plans.

Question 7

employees contribute to which qualified plan types?

Answer 7

401(k) and thrift plans

Question 8

who bears the risk of a Defined Benefit Plan and Cash Balance Plan?

Answer 8

Employer

Question 9

who bears the risk of a Profit sharing plan?

Answer 9

Employee

Question 10

which pension plans favor younger age entrants?

Answer 10

cash balance and money purchase pension plans

Question 11

which pension plans favor older age entrants?

Answer 11

defined benefit and target benefit pension plans

Question 12

when must a summary of place description be furnished to employees?

Answer 12

with 90 days after the person becomes a participant

Question 13

notices of plan amendments or changes must be provided to the employees when?

Answer 13

within 210 days after the end of the place year in which a change is adopted and applied.

Question 14

which mandatory funding pension plan is low cost to establish?

Answer 14

Money purchase plan

Question 15

which discretionary funding qualified plan is low cost to establish?

Answer 15

profit-sharing plan

Question 16

which discretionary funding qualified plan allows for social security integration?

Answer 16

profit-sharing and stock bonus plan

Question 17

how much is the penalty for a prohibited transaction initially?

Answer 17

15%

Question 18

how much is the penalty for a prohibilited transaction if not corrected within the taxable year?

Answer 18

100%

Question 19

when caclulating self employment contribution rates or self employment tax for someone who is contributing to a profit sharing plan don’t…

Answer 19

include a age 50+ catch up contribution.