Ch. 7 Qualified Plan Rules Flashcards
t/f: The ratio benefit test states that a qualified plan must cover a percentage of nonhighly compensated employees that is at least 70% of the percentage of highly compensated employees covered.
true
t/f: A top-heavy plan is one that provides more than 60% of its aggregate accrued benefits or account balances to key employees.
true
t/f: When applying coverage tests to evaluate the presence of discrimination in qualified plan offerings, an employer must include all employees, even those who have a collective bargaining agreement on retirement benefits.
false
A qualified plan must satisfy what 2 tests?
Ratio percentage test
participation test
For a defined contribution plan, annual additions include what?
employer contributions
employee salary reductions
plan forfeitures
Employee contribution must always be ____ vested
100%
Employer contribution must be vested under a ….
specified vesting schedule
Participation test must cover the lesser of
50 employees
OR
the greater of 40% or more of all employees or two employees, or if only one, that employee
Waiting period requirements
two year waiting period if plan provides immediate 100% vesting for all employees
Age and service
must be vested after on year of service (1,000 hours) or age 21, whichever is later
Defined benefit plan vesting
5 year or 3-7 yr vesting
Defined contribution plan
3 yr or 2-6yr vesting
Contributions must be made to an ____ or ____
irrevocable trust or insurance contract
What happens if it doesnt meet the minimum funding standards
subject to penalty
Profit-sharing plan contribution must meet what requirements
“substantial and recurring”
