Assignment 5 - DC Plan Structure Flashcards

1
Q

DC plan that has set req’d contrib.

  • maintains indiv. acct
  • ER contribs - A/T basis; fixed % of pay or fixed $ amt.
  • annual additions are limited
A

Money Purchase Pension Plan

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2
Q
  • DC plan w/ discret. contrib. made by ER.
  • can be alloc. based on salary, length of service, or age
A

Profit Sharing Plan

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3
Q

Plan formula which recognizes the FICA tax pd. by the ER

  • level of ER contribs. can be higher for EEs earning above a specif’d amt than for those earning below that
  • plan’s integration level and the max integration level (SS taxable wage base)
  • regs require that diff. b/w plan’s integration level and max integration level cannot exceed a certain amt
A

Permitted Disparity

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4
Q
  • 5.7% on excess comp. (over wage base)
  • alt. formulas exist for lower integration points
A

Integration Formulas

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5
Q
  • form of DC plan that is primarily invested in company stock
  • used in conjunction w/ debt financing
A

EE Stock Ownership Plan (ESOP)

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6
Q
  • a contrib. to an IRA or 401k plan that is taxed current
  • earnings are not taxed upopn distribs if requirements are met (at least 5 years in plan and triggering condition has been met)
A

ROTH

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7
Q

ER DED. LIMIT

A

25% of elig. payroll

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8
Q
  • permits the integration of most qualif’d plans with SS
  • permits plans to provide higher contribs or benefs. for higher pd EEs in order to compensate for the relative value of SS decr. as pay goes up.
A

Sect. 401(I)

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9
Q

(3) major types of DC plans

A
  1. money purch. pension plans
  2. profit sharing plans
  3. stock ownership plans
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10
Q
  • created to invest primarily in ER securities
  • can invest up to 100% of plan assets in qualifying ER securities (opposite of ERISA plans)
A

Stock ownership plans

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11
Q

Plan:

  • permits EE’s to contrib. portion of their salary into plan on a tax-deferred basis
  • configured w/ EE and/or ER contribs.
  • offer ERs considerable flexibility in terms of plan designs
A

401K plans

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12
Q

Plan:

  • elig. ER’s include = nonprofits under 501(c)(3); public schools, colleges, and universities
  • investments in ins. contracts, annuities, or mutual funds
  • due to ERISA, now have many of the same requirements that apply to 401(k)s
A

403(b)

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13
Q

plans available for smaller ER’s

A

SIMPLEs = savings incentive match plans for EE’s

SEPs = simplified EE pensions

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