CH 11 - Plan Funding & Investing Flashcards
Pension Protection Act is a uniform funding approach that focuses on…
year-by-year solvency.
How is a plan exempte from minimum funding requirements?
The plan must be fully insured.
How would the following actuarial assumptions affect contribution amounts?
higher assumed rate = ___________
lower turnover rate = ___________
higher = lower required contributions
lower = higher required contributions
The Pension Protection Act allows for a maximum deductible contribution that is considered a _________.
“cushion amount” (range between minimum and maximum)
What pension plans will be subject to the minimum funding requirements?
MONEY purchase
AND
TARGET
What are the investment objectives for a DB plan and a DC plan?
DB is to pay promised benefits while minimizing long-term costs
DC is to meet retirement needs
What is the purpose of the investment guidelines? (5)
- clarify and possibly divided investment responsibilities
- states the policy regarding the appropriate degree of risk
- provides investment benchmarks and goals
- monitor investment management for appropriate asset allocation limits
- reviewing investment guidelines (annually)
What are the funding vehicles for a qualified plan, SEPs, and SIMPLEs?
qualified plan
trusts, custodial accounts, group insurance contract
SEPs and SIMPLEs
IRAs for each participant
DC plans will charge the employer a _____ penalty if the required contribution is not made in a timely fashion.
10% penalty
