Chapter 19 - Retirement Plans for Small Businesses

Question 1

What is the criterion of Highly Compensated Employee?

Answer 1

1) The employee owns more than 5% of :
a) capital or profits interest in the employer
b) outstanding stock
c) Total voting power of all stock of the employer corporation

2) Employee’s compensation from the employer for the preceding year is more than 135,000 if the year is 2021

Question 2

What are the qualifications for defined benefit plan

Answer 2

must benefit at least:
1) lessor of 50 employees or the greater of 40% of all employees or 2 employees

Question 3

What are prohibited transactions ?

Answer 3

1) transactions between a plan and a disqualified person are prohibited and are subject to a 15% excise tax

a) A transfer of plan’s income or assets for the benefit of a disqualified person

2) A DP’s fiduciary interest in their plan’s income or assets

3) A DP’s fiduciary account that receives a consideration from a party’s transaction that has a plan income or asset(s)

4) any of the following acts between the plan and a disqualified person:

a) selling , exchanging , or leasing property
b) Lending money or extending credit
c) Furnishing goods, services, or facilities

Question 4

Disqualifying persons criteria

Answer 4