Retirement Flashcards
(21 cards)
Money purchase contributions if key ee retires & replaced by lower pd ee
Company cont. decrease
Investment returns up in MP plan
ER cont. no change
MP plan forfeitures not reallocated
ER contributions down
Forfeitures increase acct. balances
MP and profit sharing plan
Top heavy DB plan & all DC plan vesting schedule
3 yr cliff
2-6 yr. graded
100% vested w/ 2 yr. eligibility
non top heavy DB plan vesting schedule
5 yr. cliff
3 to 7 yr. graded
100% vested w/ 2 yr. elgibility
SS disparity limits: DC plans
lesser of base percentage OR 5.7%
SS disparity limits: DB plans
lessser of base percentage OR 26.25%
ACP/ACP testing %s
NHCE: 0-2%= x2 to get HCE %
NHCE: 2-8%=+2 to get HCE %
exceptions to 10% w/d penalty for IRAs
Med expenses in excess of 10% AGI
substantially equal pmts.
distributions to med. insurance preiums after sep. from employment
SIMPLE IRA
less than 100 ees
easy to start and maintain
can match to limited extent
CANNOT have another plan
SEP IRA
25% owner cont. & 18.59% SE cont.
immediate vesting
CAN be integrated with SS
21+, have to be paid $750, work 3/5 yrs.
403(b)
for non profits
ERISA if ER contributes
$23k FICA deferral
can be subject to vesting
money purchase PENSION plan
STABLE cashflow
fixed cont.
young ees
want to RETAIN ees
easy to admin
first $345k taken into account for cont.
Target benefit PENSION plan
fixed cont.
older ees
stable cashflow
415 limit
actuary determines funds INITIALLY needed
ER doesn’t guarantee amt. will be paid.
inv risk: on EE
profit sharing plan
FLEXIBLE cont.
- have to be recurring and substantial
$23k max
use when financial stability varies
adopt qual plan w/ incentive
young ees, well paid ees. sub. time to accumulate retirement savings
ER can contribute more than 25% of comp as long as it doesn’t exceed 415 limit
stock bonus plan
invested in company stock
flexible contributions
benefits are ER stock
want to broaden ownership of stock
provide ees with tax advantaged means to get stock
want workers to feel sense of ownership
DB PENSION plan
older employees and owners
guaranteed benefit
VERY stable cashflow
past service credits allowed
PBGC insurance
no mandatory withholding
cash balance PENSION plan
ER guarantees cont. level and min. rate of return
less expensive than DB plans
NSO grant taxability
when sub risk of forfeiture expires
when transfer of stock happens
rabbi trust
informally funded
may fund trust from general assets of company
ER cont. to trust are NOT subject to payroll taxes until dist. to EE
assets may be used for purposes other than obligations to EE
