Retirement

Question 1

OASDI Benefits Eligibility for Dependent/ Child

Answer 1

Under 19 full-time student (elementary, secondary school)

+18 yrs with disability occurring before 22

Question 2

Fast vesting schedule

Answer 2

Top Heavy DB plans and ALL DC plans

3 year cliff; 2-6 year graded

Or 100% vested w/ 2 yr minimum LOS eligibility

Question 3

Slow vesting schedule

Answer 3

Non-Top Heavy DB plans

5-year cliff; 3-7 year graded

100% vested w/ minimum 2 year LOS eligibility

Question 4

OASDI Spousal Benefits Eligibility

Answer 4

DEATH of worker: Spouse +60 yrs
OR
Caring for child disabled before 22 yrs

RETIRED/DISABLED: Spouse +62 yrs
OR
Has a child in care 10 yrs and never remarried(+62 yrs can still receive benefits without the worker dying/retiring/disabled after 2 years in divorce)

Question 5

Top Heavy Plan definition

Answer 5

> 60% of aggregate accrued benefits or account balances are allocated to key employees

Question 6

Calculating Vesting amounts

Answer 6

Determine vesting schedule

Eliminate year 1 (2 year minimum LOS)

Divide 100% by remaining years

(EX. 6 year graded, Year 2 = 20%, Year 3 = 40%…)

Question 7

Coverage Requirements Percentage

Answer 7

70%

Ratio-percentage test: must cover NHCE’s to at least 70% of the percentage of HCE’s covered

Average benefit test: NHCE benefits must be at least 70% of HCE’s

Question 8

Number of hours in a year of service (DC)

Answer 8

1,000 hours

Question 9

412(i) Plan

Answer 9

DB plan entirely funded with insurance

There must be an insurance need

Question 10

Salary Deferral/reduction Max

Answer 10

$18,000

Question 11

DC Contribution Max/Annual Additions Max/Section 415 Limit

Answer 11

$53,000

+$6,000 catch-up

Question 12

Max DB Benefit

Answer 12

$210,000/yr

Question 13

401K Deferrals subject to…

Answer 13

FICA and FUTA

Question 14

DB/DC Salary Cap

Answer 14

First $265,000

Question 15

SIMPLE IRA Salary Cap

Answer 15

$416,667

Question 16

IRA Keys

Answer 16

NO Loans
NO Life Insurance
Immediate Vesting
May NOT be creditor protected (state-by-state)
+59 1/2 for no 10% penalty
Must take RMDs @ 70 1/2 (even if not an owner)

Question 17

Cash Balance Plan

Answer 17

DB Plan
Guaranteed Returns (employer)

Like a Money Purchase

Question 18

Target Benefit

Answer 18

DC plan; no deferrals; employee takes investment risk

Question 19

Salary Deferral/reduction Max

Answer 19

$18,000

Question 20

DC Contribution Max/Annual Additions Max/Section 415 Limit

Answer 20

$53,000

+$6,000 catch-up

Question 21

Max DB Benefit

Answer 21

$210,000/yr

Question 22

401K Deferrals subject to…

Answer 22

FICA and FUTA

Question 23

DB/DC Salary Cap

Answer 23

First $265,000

Question 24

SIMPLE IRA Salary Cap

Answer 24

$416,667

Question 25

IRA Keys

Answer 25

NO Loans NO Life Insurance Immediate Vesting May NOT be creditor protected (state-by-state) +59 1/2 for no 10% penalty Must take RMDs @ 70 1/2 (even if not an owner)

Question 26

Cash Balance Plan

Answer 26

``` DB Plan Guaranteed Returns (employer) ``` Like a Money Purchase

Question 27

Target Benefit

Answer 27

DC plan; no deferrals; employee takes investment risk

Question 28

NO other plans...

Answer 28

SIMPLE

Question 29

EASY to install and LESS EXPENSIVE than qualified profit sharing plan

Answer 29

SEP

Question 30

Form to establish SEP

Answer 30

Form 5305-SEP

Question 31

This plan is disadvantaged by returning part-time employees...

Answer 31

SEP

Question 32

No new SARSEP can be established, but...

Answer 32

SARSEP; new employees can be added if established before 1997

Question 33

DB Top Heavy Minimum Benefit for NHCEs

Answer 33

>= 2% of comp

Question 34

DC minimum employer contribution

Answer 34

>= 3% of comp **Profit sharing plans are not subject to this, but are required to be substantial and recurring

Question 35

401k and 403b non-discrimination Testing

Answer 35

HCE's defer 0-1%: x2 NHCE HCE's defer 2-8%: +2 NHCE

Question 36

Plans NOT Integrated with Social Security

Answer 36

ESOP, Stock bonus, SIMPLE, SIMPLE 401(k)

Question 37

Permitted Disparity for DC plan

Answer 37

Lesser of base or 5.7% **Under 11%, use 1/2 of excess as base and permitted disparity

Question 38

Permitted disparity for DB Plan

Answer 38

Lesser of base or 26.25%

Question 39

Boats and Trailers HO Coverage limit

Answer 39

$1,000 in coverage C

Question 40

Taxability of Social Security

Answer 40

50% taxed at MAGI $25,000 single, $32,000 MFJ 85% taxed at MAGI $34,000 single, $44,000 MFJ

Question 41

Keogh Contribution Shortcuts

Answer 41

For 15% contributions multiply employer profit by 12.12% For 25% contributions multiply by 18.59%

Question 42

Deductible IRA (One Spouse active participant in employer plan)

Answer 42

Inactive spouse can make a deductible contribution under $183k-191k AGI

Question 43

IRA contribution deductibility phaseouts

Answer 43

Single $65K Married $110K Spousal $185K

Question 44

Roth IRA Eligibility Phaseouts

Answer 44

Single $116-131k MFJ $183-193k Separately $0-10k (can't happen)

Question 45

Solution for overfunded DB Plan; goal is continuation of contributions

Answer 45

Fully-fund with life insurance or some other low return vehicle. This reduces the expected return assumptions and allows participants to continue to contribute to the plan

Question 46

VEBA benefits cannot fund...

Answer 46

Retirement or deferred compensation

Question 47

Social Security Benefits reduction before NRA/FRA

Answer 47

*1/180 Reduction of benefit per month for the 36 months preceding FRA/NRA (EX: normal monthly benefit amt = $1,000 Taking benefits 24 months before NRA 1/180 x 24 x $1,000 = $866.60 adj. monthly benefit

Question 48

Social Security Benefits Reduction working after retirement

Answer 48

Younger than NRA in all of 2015... $1 for every $2 earned above $15,720 Reaching NRA in 2015... $1 for every $3 earned above $41,880 until NRA