1.9 ERISA

Question 1

ERISA (Employee retirement income security act of 1974)
*this is for private employers (non governmental)

Answer 1

eligibility for retirement plans (must meet)
-21 years or older
-worked 1,000 hours in the previous year

SECURE ACT (expanded) : permanent part-time; 500 hours for 3 consecutive years 401k only

Question 2

ERISA (funding)

Answer 2

-MUST be kept in trust separate from company’s other assets (not subject to creditors claims)

Question 3

ERISA (communication)

Answer 3

minimum communication standards
send plan documents
summary plan documents all potential eligible employees

Question 4

ERISA (beneficiaries)

Answer 4

if employee is married
-must name spouse as bene for at least 50% of their retirement acc. (or get signed waiver from spouse)

other

Question 5

ERISA (fiduciary responsibility)

Answer 5

risk control first consideration in investments
-no uncovered options
no margin
no short sale of stock

vesting: must fully vest within set time frames in law
(ex: cliff vesting, graded vesting)

Question 6

vesting

Answer 6

how soon employee has rights to keep employer contributions

Question 7

Cliff vesting

Answer 7

100% by 3 yr of service

Question 8

Erisa participation

Answer 8

Eligibility rules for all employees
Employees must be covered at age 21 or  older, and have performed one year of full-time service
 one year full-time service defines as 1000 hours or more

Question 9

Erisa funding

Answer 9

Funds contributed to the plan must be segregated from other corporate assets
Plan trustees must administer invest the assets prudently in the best interest of the participants
IRS contribution limits must be  observed


Question 10

What type of plant does Erisa regulate

Answer 10

 Private sector( corporate plans) only it does not apply for plans for federal or state government workers
NO NONQUALIFIED PLANS

Question 11

HSA

Answer 11

Health savings account, which is tax exempt trust, or custodial account. Individuals can set up with a qualified. HSA trustee to pay or reimburse certain medical expenses incurred.

Question 12

Benefits of an HSA

Answer 12

Claim tax deduction for contributions to you or someone other than your employer make it to your HSA even if you do not itemize your deductions on form 1040

Contributions to your HSA made by your employer may be excluded from your gross income

Contributions remain in your account until you use them

 interest and earnings on the assets are tax-free

Distributions may be tax free if you paid pay qualified medical expenses

HSA are portable in stay with you if you change your employers or leave for work

Question 13

Eligibility requirements for HSA

Answer 13

You must be covered under a high deductible health plan on the first day of the month

No other health coverage, except what is permitted under the rules

Not enrolled in Medicare

Cannot be claimed as a dependent on someone else’s tax return

You cannot have a joint HSA

Question 14

High deductible, health plan HDHP

Answer 14

Higher annual deductible than typical health plans

Maximum limit on the sum of annual deductible

Question 15

Contributions to an HSA

Answer 15

For employer use HSA, the employer and employee Maples contribute to the HSA in the same year

Contributions must be made in cash, but the law permits investments to be made into stocks, bonds, and mutual funds.

Question 16

HSA verse FSA

Answer 16

FSA or flexible spending account holds money deducted from the employees pay and remains with the company it is not investable and if you don’t use it you lose it

Question 17

I’m on the eligibility requirements to open a health. Savings account is

Answer 17

The individual must have an HDHP