CH 10 - Death & Disability Benefits; Beneficiary Planning Flashcards
A DB plan can provide a Qualified Preretirement Survivor Annuity (QPSA) to those married for at least…
1 year.
A Qualified Pre Retirement Survivor Annuity (QPSA) and a Qualified Joint-and-Survivor Annuity (QJSA) must be provided to all married participants UNLESS…
the participant and spouse consent in writing to waive.
This is a form of payment for married participants that must be a 50-100% survivor annuity.
Qualified Joint and Survivor Annuity (QJSA)
Profit-sharing plans can elect out of a Qualified Joint and Survivor Annuity (QJSA) under what THREE conditions?
- does not allow annuity payment options
- does not allow transfers from other plans
- 100% death benefit payment to spouse
Life insurance death benefits under a qualified retirement plan must be only incidental, not a primary goal. The aggregate policy premiums cannot exceed…
Term Policy and Variable Policy and Universal Policy = ________
Whole Policy = ________
A) 25% of aggregate employer contributions
B) 50% of aggregate employer contributions
(Example: total premiums after 5 years = $30,000 and total employer contributions = $125,000)
Incidental death benefits (eg - life insurance) in a DB plan, cannot exceed _______ of the monthly benefit.
100 times
What are the incidental death benefit (eg - life insurance) limits within profit-sharing plans?
Profit-sharing plans are NOT subject to any limits
Unlike other benefits, life insurance bought in a plan is subject to income taxation at the time of purchase. Table 2001 amounts are recovered _______.
tax-FREE
The definition of disability is key. So, how should employers define “disability”?
In a way that facilitates administrative ease.
Disability benefits are generally provided outside of a qualified plan. However, if the benefits are provided within a qualified plan, what are the THREE requirements of the employer?
- full vesting of the participant’s benefit (not required)
- benefit payout upon disability, and
- continued accrual during the disability period
One should review beneficiary designations after…
MAJOR events.
What should you do if beneficiaries have creditor issues?
put the benefits into a trust
The cost of pure insurance protection is considered _____ and _____.
income and taxable every year.
When can Table 2001 cost-basis amounts be recieved tax-free?
When a participant is receiving a life insurance policy as part of a distribution from a qualified plan or distributed as a death benefit. However, self-employed and S-corporations owners CANNOT recover cost-basis amounts tax-free.
