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Retirement Flashcards

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1
Q

Taxation Of SS Benefits

A

50%. 85%
Single. 25k. 34k
Married 32k. 44k

Then 50% or 85% x SS benefit = what is taxable

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2
Q

PBGC

A

Pension Benefit Guaranty Corporation

Insures DB and cash balance plans

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3
Q

Hardship Withdrawl

A

Subject to ordinary income tax and 10% penalty (can be waved)

Distribution equals total deferral amount and vested profit sharing contribution

Has to have 401k provisions

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4
Q

NUA

A

Net Unrealized Appreciation

Applies to ESOP (employee stock ownership plans)

20k basis taxed as ordinary income when moved out at retirement worth 200k. 180 is not taxed till sale (ltcg)

Price moves to 230k after 6 months and sold (180k LTCG , 30k stcg)

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5
Q

Ratio percentage test

A

70% of hce%

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6
Q

Age and service rules

A

21 years old and 1 year employed

1,000 hr in 12 months = 1 year

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7
Q

Ubti

A

Limited partnership interest

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8
Q

Subject to ownership attribution rules

A

Spouse, Children, grandchildren, and parents

Not siblings

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9
Q

Pension max strategy

A

Pure life annuity - Just worker higher pay out (risk of death)
Joint and survivor annuity - worker and spouse (higher payout)

Take delta between the two and buy a whole life policy

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10
Q

Social security

A

Fully insured 40 quarters
Currently insured only 6

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11
Q

Spouse of retired or disabled worker can get SS check if they are

A

62 or older
Has a child in care under age 16
Has a child age 16 and over and disabled before 22

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12
Q

Surving spouse can get a check if

A

They are 60 and older

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13
Q

Divorced spouse gets SS

A

10 years married
2 years divorced
Cannot get remarried

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14
Q

Dependent benefits

A

Under 19 still in high school
Over age of 18 disabled before 22

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15
Q

Pia

A

Retirement benefit at FRA

primary insurance amount

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16
Q

Spousal benefit

A

Wife gets half of spouses benefit

When he dies she gets stepped up to his benefit

FRA is 67

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17
Q

Discounts to SS

A

6.66
13.66
20
25
30

If you tap it early and go back to work
Under FRA every $2 you make over limit ~ 22,320 take $1 away from SS
Over FRA every $3 you make over limit ~ 59,520 take $1 away from SS

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18
Q

SS Disability

A

1 insured has to be under 65
2 disabled for 12 months , expected to be disabled for at least 12 months, expected to result in death
3 5 month waiting period

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19
Q

File and suspend

A

Doesn’t exist anymore

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20
Q

Forfeitures

A

Money that was not vested left behind

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21
Q

Multiple employer

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A

Can have multiple plans and are all able to reach 69k max
If they are unrelated

Deferring is limited to specific plan max

22
Q

Qualified Plans

Study These Flashcards
A

ERISA
Eligibility: age and service
Top heavy rules
Vesting schedule
ADP/ACP
Cross testing (except ESOP)
Integrated with SS (except ESOP)
Rest on sheet

23
Q

ADP/ACP TESTING

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A

0-2. X 2

3-up + 2

24
Q

Cross-testing (except ESOP)

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A

“Age weighted”

Lesser of 1/3 of allocation rate for HCE or 5%

25
Avg benefits test
Avg benefits for NHCE must be at least 70% of those that are HCE
26
Top Heavy Plans
More than 60% of benefits or account balance are allocated to key employees Subject to vest schedule if in a DB plan DC plan doesn’t matter, needs to use fast vesting schedule
27
Catch up provisions
Over 50 years or older 7500 401k and Roth 403b 457 or (final 3 years 2 x 23,000) 3500 Simple plans 1000 Ira and Roth HSA (55)
28
Loans from qualified plans
Max loan lesser of 50% of vested balanced or 50,000 Exception: Can take a 10,000 loan if you got it Repay in 5 years or less, unless used for primary residence Payment quarterly if messed entire balance is deemed taxable distribution, 10% penalty I’d under 59 1/2 Loan interest is deductible only if the loan is made for a participants primary residence and is secured by the primary residence (Not allowed for Key Employees) Employees can restrict loans
29
30
Traditional Ira
7000 1000 catch up Need earned income (fica money)
31
Roth
Earned income 7000 catch up 1000 Cannot deduct Roth contributions
32
Is there a limit on who can do a Roth conversion
No
33
Simple plan
Not subject to discrimination testing Need to cover anyone who has earned 5,000 in any 2 previous years and expected to earn it this year 3 % 1for1 or 2 % automatic check on this Penalty if cashed out under 2 years of starting: 25%
34
403 funding
Only mutual funds and annuities
35
UBTI
Unrelated business taxable income Exceeds 1000 UBTI is subject to income tax Income from LP or dividends from margin accounts are considered UBTI Not real estate
36
Substantially equal payments ş72t
5 years or more till 59 1/2 53 - can take substantial and equal payments till 59 1/2 Penalty only for payments taken before 59 1/2
37
Ira rollovers
Almost any Ira can be rolled over into another Ira Except: non governmental 457
38
60 day rollover rule
Ira related only When custodian writes you a check Needs to be done in 60 days No withholding
39
Direct transfers
Plan to IRA Required to withhold 20% if it is a check out to you: distribution If its direct transfer to another firm it is not required to withhold
40
RMD
Qualified plans 403 457 Simple Sep SARSEP IRA STILL WORKING EXCEPTION Not for IRA In Qualified plan 403 or 457 if you are still working not 5% owner not RMD required
41
RMD calculations
Previous years ending balance / life expectancy# Younger spouse more than 10 years allows for longer distribution period
42
RMD penalty
25% on whatever you didn't take
43
QCD
Qualified charitable deduction Only from Ira No tat deduction is available 70 1/2 years old
44
QDRO
Qualified domestic relations order Only for qualified plans and 457
45
NUA
Net unrealized appreciation For your company stock only Don’t roll company stock it into ira, rest if it is fine Hold for one year after transfer ltcg
46
QJSA
Qualified joint and survivor annuity Post retirement, death benefit for the plan participant spouse Qualified pension plans are required to provide QJSA option Currently the survivorship annuity must not be less than 50% or greater than 100% of the annuity payable
47
QOSA
Qualified optional survivor annuity Requires a second joint and survivor annuity option in pension plans
48
Can you take RMD from one ira if you have multiple
Yes
49
50
Deferred compensation for sole owner of c corp
Can’t do it not allowed

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