Lesson 6 and 7

Question 1

Eligible employee Initial Notification of Qualified Plan Est.

Answer 1

In person or posting - 7 to 21 days before IRS request

Mailed - 10 to 24 days before IRS request

Question 2

SPD

Answer 2

Summary Plan Description

Question 3

SPD requirements

Answer 3

• within 90days of EE participation
• within 120 days of plan formation

Question 4

SMM

Answer 4

Summary of Material modification

Question 5

SMM Requirements

Answer 5

EE notification within 210 days of amendment

Question 6

DC Plan legal limit of contribution

Answer 6

25% of compensation paid to EEs

Question 7

DB forfeitures

Answer 7

Can ONLY be used to reduce future plan costs

Question 8

DC forfeitures

Answer 8

Can be used to reduce future plan costs OR allocated to remaining participants.

Question 9

ERISA

Answer 9

Employee Retirement Income Security Act (of 1974)

Question 10

Self Employed Contribution limits

Answer 10

$61,000 or 100% compensation

Question 11

Self Employed Calculation

Answer 11

Earned Income x 92.35%

x 15.3%

/2 = Y

Earned Income - Y = Z

Z x 20% = contribution

Question 12

Prohibited transaction penalties

Answer 12

15% if not corrected in 14 days
100% if not corrected in a year

Question 13

Form 5500 EZ

Answer 13

Self employed and one-participant plan assets exceed 250k. No need to file sub 250k

Question 14

SEP ER contributions limited to lessor of:

Answer 14

25% EE covered compensation.

• 61,000 (2022)

Question 15

Eligible SEP Employees

Answer 15

• 21 or older &
• min 650 earned income or more &
• worked 3 of last 5 years

Question 16

SEP Vesting schedule

Answer 16

100% at all times

Question 17

Sep contribution limit

Answer 17

Lessor of:

25% EE compensation

61,000