Retirment Plan Overview Flashcards by Jeff Pratt

What are the four categories of retirement plans and which ones are qualified plans?

Defined benefit pension plans

Defined contribution plans

Other tax advantage plans

Nonqualified plans

Qualified plans are benefit, pension plans, and defined contribution plans

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What are the defined benefit pension plans?

Traditional define benefit pension plans

Cash balance pension plan

DB(K)

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What are the defined contribution plans?

Money purchase pension plan

Target benefit pension plan

Profit sharing plans

Stock bonus plan

Employees stock ownership plan (ESOP)

Section 401K plan

Thrift plan

Simple 401(k) plan

Age based profit-sharing plan

New comparability plan

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What are the other tax-advantaged plans?

SEP Plan

SARSEP plan

Traditional IRA

Roth IRA

Section 403B plan

Simple IRA

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What are the nonqualified plans?

Deferred compensation plan

Section 457 plan

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What plans are employer contributions deductible?

All of them

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Are employer contributions to qualified and other tax advantage plans subject to payroll tax?

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Are employee contributions to qualified and other tax advantage plans subject to payroll tax?

Yes

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Net unrealized appreciation (NUA) treatment for employer stock is used for qualified plans or other tax advantage plans?

Used for qualified plans, but not other tax advantage plans

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The 20% withholding on distributions is required for qualified plans or other tax advantage plans?

Qualified plans, but not other tax advantage plans

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Qualified and other tax advantage plans

Which one may invest in life insurance?

Qualified plans, but not other tax advantage plans

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Qualified and other tax advantage plans

In-service withdrawals are allowed in which plans

Both with certain rules

Pension plans May permit in-service withdrawals from employees age 59 1/2 or older

Profit sharing plans there may be limitations in the plan for employer contributions

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Qualified and other tax advantage plans

Investment in employer securities may exceed 10% in which of these

Yes, other tax advantage plans

Underqualified plans no for pension plans and yes for profit sharing plans

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Qualified and other tax advantage plans

Which offer 100% immediate vesting

Qualified plans no, with the exceptions of profit sharing plans employee will be automatically fully invested when he attends normal retirement age under a section 401(k) plan, elective deferral, qualified, non-elective, and qualified, matching contributions and safe harbor contributions to a safe harbor section 401(k) plan are 100% vested at all times

Other tax advantage plans are 100% immediate vesting, but a 403B plan can have vesting schedules

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Employer contributions

Which plans have mandatory employer contributions?

Define benefit pension plan

Money purchase pension plan

Cash balance pension plan

Target benefit pension plan

Simple plan

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Employer contributions

Which plans have discretionary employer contributions?

Profit sharing plan

Stock bonus plan

Savings or thrift plan

Section 401(k) plan

ESOP

SEP / SARSEP

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Under which retirement plans plans are employee contributions pretax

DB(K) plan, which is a sort of defined pension plan

Profit sharing plans , also after tax

401(k) , also after tax

SARSEP (Existing)

Simple

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Under which retirement plans are employee contributions after tax?

Money purchase plans

Profit sharing plan , also pretax

Savings or thrift plan

401(k) , also pretax

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Which retirement plans have guaranteed interest credit

Cash balance pension plan

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Which retirement savings plan has leverage borrowing to purchase company stock?

ESOP

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Which retirement plans do not allow in service withdrawals

Cash balance pension plan

Target benefit pension plan

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Which retirement plans offer in-service withdrawals after age 59 1/2

Defined benefit pension plan

Money purchase pension plan

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Which retirement plans do not allow employer securities

SEP/SARSEP

SIMPLE

Which retirement plans allow investment employers securities up to 10%?

Define benefit pension plans

Money purchase pension plans

Cash balance pension plans

Target benefit pension plans

Which retirement plans allow you to invest in an unlimited amount of employer securities?

Profit sharing plan Stock bonus plan Savings or thrift plan Section 401K plan ESOP

Which retirement plans do not allow integration with Social Security?

ESOP SARSEP SIMPLE

What retirement plans must use forfeitures to offset plan expenses?

Defined benefit pension plan Cash balance pension plan

Which retirement plans are forfeitures not applicable?

SEP / SARSEP SIMPLE

Which retirement plans can you offset forfeitures to plan expenses?

Money purchase pension plan Profit sharing plan Stock bonus plan Savings or thrift plan 401(k) ESOP Target benefit pension plan

In retirement plans loans are possible from all plans except?

SEP / SARSEP SIMPLE but allowed for SIMPLE section 401k

All retirement plans allow 10 year forward averaging except which ones

SEP / SARSEP SIMPLE, except SIMPLE 401k

In retirement plans, the employee takes on all the investment risk except for which types of plans. These plans, the employer takes the risk.

Define benefit pension plan Cash balance pension plan

Which retirement plans have actuarial cost?

Define benefit pension plans Cash balance pension plan Target benefit pension plan

Which retirement plans are covered by PBGC insurance?

Define benefit pension plan Cash balance pension plans

Which retirement plans have immediate 100% vesting?

401(k) employee contributions only not for employer contributions SEP / SARSEP SIMPLE

Which retirement plans have 5-year cliff or 3-7 year graduated?

Define benefit pension plan

Which retirement plans have 3 year cliff or 2 - 6 year graduated?

Defined benefit pension plan if top-heavy Money purchase pension plan Profit sharing plan Stock bonus plan Savings or thrift plan 401(k) employer contributions ESOP Cash balance pension plan, 3-year cliff only Target benefit pension plant

Which retirement plans favor older employees

Define benefit pension plans Target benefit pension plants Profit sharing plan can favor older employees if age weighted or if a new comparability profit-sharing plan

What is the maximum limit for a defined benefit plan?

275,000

What are the define contribution plan annual edition limits lesser of:

$69,000 Percent of compensation 100% The lesser of either of these

What are section 401(k) and section 403B deferral limits

$23,000

What is the IRA contribution limit for 2024?

$7000

What are the catch up provisions for 401(k), SARSEP, 457 and 403B plans?

$7500

What are the catch-up provisions for a SIMPLE?

$3500

What are the catch-up provisions for an IRA?

$1000

How much can you contribute to a SIMPLE plan?

$16,000

What is the minimum earnings required for employee to be eligible for a SEP plan?

$750

What is the maximum compensation that can be taken into account when determining contributions to a SEP plan?

$345,000

What is the maximum combined employer and employee contributions to a section 457 plan?

$23,000

What is the maximum compensation that can be taken into account on determine qualified plan contributions

$345,000

What is the Social Security integration wage base?

168,600

What is the Medicare wage base?

Unlimited

What are the advantages to qualified plans for the employer?

Employer contributions are deductible and no payroll tax

What are the advantages to a qualified plan for the employee?

Employee contributions are Deductible , except thrift or Roth - but payroll is taxed Earnings are tax deferred ERISA protection Net unrealized appreciation

What are some of the disadvantages of qualified plans?

Costs Participation Vesting Top heaviness Minimum contributions Reporting Disclosure Testing (50/40 Defined benefit ratio Test, Average benefit % test, Section 401k ACP, Section 401k ADP 2024 limits (compensation limit = $345,000, define benefit limit = $275,000, defined contribution = Lessor of 100% EE compensation or $69,000) Nondiscrimination Fairness coverage Highly compensated Key employees

What are some of the objectives and questions to plan selection?

Cost and operation Cash flow, funding and flexibility Reporting Self reliance Investment risk Nature of benefits - cash/stock Maximum deferral

What are ways to increase profit sharing in retirement plans

Forfeitures Integration Age Weighting