Retirement Plans Flashcards
(24 cards)
QP Vesting Schedule
Cash Balance-always 3 yr cliff
Top Heavy Plans- DC 3 yr cliff or 2-6 yr graded or 100% with 2 yr eligibility
Not Topy Heavy: 5 yr cliff or 3-7 hr graded or 2 yr elig
Key Employee (top heavy) vs Highly Compensated
Key, 3 letter’s, 3 rules (they only have to meet 1/3 or 1/2)
- greater than 5% owner
- greater than 1% owner and 150k in comp
- officer and comp 165k+
Highly compensated-2 words, 2 rules
- greater than 5% owner
- prior year greater than 110k (2011), 115k (12)
SIMPLE IRA
Cannot Be a multiple plan
SIMPLE 401k can be a multiple
Ratio Percentage Test (Coverage Req for ERISA-eligible employees)
% of eligible NonHighly Compensated Employees benefiting from plan must be 70% of % of Highly Compensated employees:
Example: if 80% of eligible HC’s benefit from Plan, at least 56% of eligible NHC must benefit (.7 x .8= 56%)
Average Benefits Test
Coverage Req for ERISA-eligible employees
Nondiscriminatory class of employees, Average Benefit Percentage for NHC's must be 70% of average benefit percentage for HC's
QP Loan Req’s
50k (or 50%) 80k in plan-40k. 100% of 10k.
15k balance. 10k loan max 20k- 10k 22k-11k At least quarterly payments reasonable interest rate 5 yr repayment, more for house payment
ISO vs NSO (NQSO)
ISO has a lot of restrictions/regulations
ISO-held 2 yrs from Grant Date and 1 yr from exercise.
ISO-no taxable income at excercise
Bargain Purchase Element is treated as AMT income (difference between option price and FMV)
ISO’s subject to W-2 Income but no FUTA or FICA.
Stock Purchase Plan
85 to 100% of purchase price.
up to 25k co. stock per yr.
2/1 not met, taxed as ordinary income
Excess Benefit Plan
Makes them whole. If you make more than 250k
SERP
Flexible (SERPENT-Flexible)
Top Hat,
Unfunded
Promise to pay/IOU
Not included in taxable wages
Sick Pay,
Employer Contributions
ER paymens for medical or hospital expenses
nonqualified deferred compensation plan deferrals as long as subject to risk of fofeiture
Social Security Reduction
At 62: $1 for every $2 earned above $14,640
FRA year up to Birth Month: $1 for $3 over $38,880
FRA is 66 for DOB 1/2/43 to 1/1/55
Taxation of Social Security
50% of Benefits Taxable:
Single MAGI: 25k, MFJ: 32k
85% Taxable: Single: 34k, MFJ: 44k
Note: 50% of SS income will be used for calculation:
Ex: Salary: 20k, SS 20k, Total Income 30k
Note: Muni Bond interest counts too
Pension Payout Maximimums
Lesser of 200k or 100% of Participants comp over 3 highest years- Section 415 limit
Only first 250k on income is calculated
ADP/ACP Testing: Actual Deferral Percentage and Actual Contribution
- Not more than 125% of the NHCE rate if deferring 8% or greater
- Not more than 200% of the NHCE rate and not more than 2% greater if deferral is between 1 and 8%.
Example: NHCE contributing 4%: 4%+2 = HCE can’t cont more than 6%
NHCE is contributing 10%, HCE can cont 12.5%
Social Security Wage Base
110,100
SS integration
DC Plans: lesser or base contribution % or 5.7%
DB Plans: Lesser of base % or 26.25%
HCE Example:250k Salary: Base Contribution of 17%
First 110k x17%
Remaining 140k @ 22.7% (17-5.7%)
ESOP cannot be integrated. Almost all other plans can be
Roth IRA phaseouts
Single: 110-125k
MFJ: 173-183k
MFS: 0-10k
T-IRA Phaseouts
Single (Active Participants): 58-68k
MFJ (active) 92-112k
Non Active Spouse: 173-183k
Roth 401(k)/403(b) differences
no 10k for first time home buyers,
RMD’s at 70 1/2
No income phaseouts
403(b) Catchup
Additional 3k allowed (in addition to 5,500) if with same employer for 15 yrs
457 Plan
Can be combined with another plan: NQ
RMD’s
Req Distributionis April 1st of the year following the year the participant turned 70.5. After that, Dec 31st.
RMD’s not req QP’s 457 and 403(b) is 4/1 of year after 70.5 or retired
