Chapter 1 Flashcards
5 Types of Retirement Plans
- Qualified Plans
- Non-Qualified Plans
- Tax-Deferred Individual Plans
- Tax-Deferred Plans
- Individual Retirement Accounts (IRA)
3 Types of Tax-Deferred Individual Plans
- SEP IRA Plan
- SARSEP IRA Plan
- SIMPLE IRA Plan
These are not qualified plans.
What are Tax-Deferred Plans? - Name 2 types.
Like qualified defined contribution plans, but are NOT qualified plans.
- 403(b) Plans
- 457(b) Plans
What 2 requirements must a qualified plan meet?
- Those of the Employee Retirement Income Security Act of 1974 (ERISA)
- The Internal Revenue Code
Then they provide favorable tax treatment for both the employer and employee.
Qualified plans are divided into what 2 classifications?
- Defined Benefit Plans - employer promises to pay a benefit at the employee’s retirement
- Defined Contribution Plans - employer pays a specific amount into an employee’s account but the benefit is undetermined
15 types of defined contribution plans
- Profit Sharing Plans
- Keogh (self-employed) Profit Sharing Plans
- Age-weighted Profit Sharing Plans
- Cross-tested Profit Sharing Plans
- 401(k) Plans
- Safe-harbor 401(k) Plans
- Savings Incentive Match Plan for Employees 401(k) plans (SIMPLE 401(k) Plans)
- 401(k) Keogh Profit Sharing Plans
- Employee Stock Ownership Plans (ESOP)
- Leveraged Employee Stock Ownership Plans (LESOP)
- Stock Bonus Plans
- 401(k) Employee Stock Ownership Plans (KSOP)
- Target Benefit Plans
- Money Purchase Pension Plans
- Money Purchase Pension Plans - Keogh
3 Types of IRAs
- Traditional IRA
- Non-Traditional IRA
- Roth IRA
7 Types of Qualified Defined Benefit Plans
- Flat Benefit Defined Benefit Pension Plans
- Unit Benefit (or Unit Credit) Defined Benefit Pension Plans
- Fixed Benefit Defined Benefit Pension Plans
- Cash Balance Defined Benefit Pension Plans
- Pension Equity Defined Benefit Pension Plans
- Insurance Contract Plans - Section 412(i) Defined Benefit Plans
- Defined Benefit Pension Plan Keoghs
2 Types of Hybrid Qualified Plans
- Floor-Offset Plans
2. IRC Section 414(x) Eligible Combined Plans - Combined Defined Benefit/401(k) Plans for Small Employers
4 Types of Non-Qualified Plans
- Pure Deferred Compensation Plans
- Excess Benefit Plans
- Supplemental Executive Retirement Plans (SERP)
- Top Hat Plans
6 Things ERISA Established
- Established a new set of rules for participation in retirement plans.
- Added mandatory schedules for the vesting of benefits.
- Set minimum funding standards.
- Set standards of conduct in plan administration and the handling of plan assets
- Required disclosure of plan information.
- Established a system for ensuring the payment of benefits.
What aided the passage of ERISA?
The plight of 4,400 Studebaker autoworkers who found themselves without expected pensions when their employer went bankrupt.
Pension Protection Act of 2006
- Makes permanent the increased contribution limits, enhanced vesting, and increased portablitiy of Economic Growth & Tax Relief Act of 2001.
- Requires faster and stricter funding standards for single & multiemployer defined benefit pension plans.
- Enacts rules for hybrid plans including cash balance, pension equity, and hybrid plans that are incorporated in Title 1 of ERISA (Dept. of Labor provisions), Title 2 of ERISA (Internal Revenue Code), and Age Discrimination Enforcement Act.
- Gives IRS full authority to implement and maintain IRS correction programs.
- Requires Employers to allow defined contribution plan participants to direct that their investments in publicly traded employer securities be reinvested in other suitable options.
- Creates new types of plans (less than 500 employees) consisting of a combination of defined benefit plan and 401(k) plan where the assets are held in a single trust.
- Creates safe
- Creates an exemption
- Authorizes a new insurance product
- Allows assets held
- Phases out use of 30-year Treasury
- Allows pension plans to provide
- Makes permanent the savers credit for IRA
- Allows benefits received by non-spouse beneficiary
- Allows qualified retirement plan distributions
- Liberalizes the portability rules
- Authorizes individuals age 70.5 or older to direct
- Allows taxpayers to authorize
- Repeals the sunset provision of EGTRRA
What Type of Plan
Profit Sharing Plans
Defined Contribution Plan
What Type of Plan
Keogh (self-employed) Profit Sharing Plans
Defined Contribution Plan