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
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
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
4
Q
- 5.7% on excess comp. (over wage base)
- alt. formulas exist for lower integration points
A
Integration Formulas
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)
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
7
Q
ER DED. LIMIT
A
25% of elig. payroll
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)
9
Q
(3) major types of DC plans
A
- money purch. pension plans
- profit sharing plans
- stock ownership plans
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
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
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)
13
Q
plans available for smaller ER’s
A
SIMPLEs = savings incentive match plans for EE’s
SEPs = simplified EE pensions