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Flashcards in Retirment Plans end Education Plans 6% Deck (17)
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NonQualified plans

may discriminate and do not need IRS approval

1

Deferred compensation

-NonQualified plan in which the employer promises to pay compensation to the employee in the future
-IRS Code 457

2

457(b)

-457b is for public institutions and tax exempt organizations (except for churches)
-employees set aside current compensation into the acount pretax
-no 10% penalty on early withdrawals

3

ERISA - Qualified Plans - Investment restrictions

-short uncovered options is generally not allowed
-covered call writing is
-gold and silver must be purchased in coins that were minted by the US

4

Can you trade on margin in an IRA account?

NO!

5

IRA taxation

-if contributed more than the max, a 6% penalty is assessed every year until the amount over is removed

6

Early withdrawal without penalty

-death of the account owner
-permanent
-to pay for medical ins premiums if the owner has been disabled for at least 12 weeks, or to pay for medical expenses of 7.5% of the owner's income during a disability
-72(t) distribution - if the distributions are made in equal periodic installments for a minimum of 5 years or until the recipient reaches age 59 1/2, whichever period is greater
-to pay for education expenses
downpayment on a first time home purchase limited to a lifetime amount of $10,000

7

RMD - Penalty

50% of the amount that was supposed to be taken

8

IRA Distributions after owners death

If the owner was under the age of 70 1/2, and had not begun taking distributions:
1. all funds must be withdrawn by the end of the 5th year following the owner's death
2. funds may be withdrawn based on the beneficiary's life expectancy
3. If the beneficiary is the surviving spouse, the survivor may elect to treat the funds a their own, an my roll them into an existing IRA, or employer sponsored qualified plan. RMD will then be based on the surviving spouses's life expectancy

if the owner was older than 70 1/2 and had begun taking distributions, the distributions must continue as started, based on the deceased owner's life expectancy had they remained alive

9

Roth IRA income limits

114 to 129
181 to 191
can transfer an ira to roth if income is in this range (it is a taxable event for the ira)

10

KEOGH (HR-10)

-restricted to self employed individuals
-contribution limited to portion of income from self employment
-employers earning in excess of $100,000 a year must give employees the greater of 7.5% or the same percentage as they contribute themselves

11

KEOGH Contribution limits

-max of 20% of pretax earnings for self-employed persons, not to exceed $49,000
-max of 25% if an employee
-employees may make additional voluntary contributions limited to the lesser of $2,500 or 10% of earned income, these are after tax

12

SEP Eligibility

-21 years old
-worked for the same employer in at least 3 of the last 5 years
-has received at least an IRS-specified amount in compensation from the employer

13

SEP-IRA Contributions

-contributions are flexible, but must be the same for all employees in the year decided
-cannot exceed the lesser of 25% of gross earnings or $52,000
-all contributions are made by the employer

14

Simple

-small businesses with less than 100 employees
-participants are 100% vested in employer contributions
-no loans are permitted
-2-year waiting period before assets can be rolled into an IRA

15

Profit-Sharing Plans

-"comp-to-comp"-most common method for determining each participants allocation
-take employees compensation and divided by total of all
employees compensation
-can have other retirement plans
-must file 5500
-employers are allowed full discretion with regard to making contributions
-limited to a maximum annual contribution of the lesser of 25% or $49,000

16

403(b)

-public schools and certain 501(c)(3)