Chapter 4: Compensation Flashcards
Compensation is used to calculate 415 limits, HCE determinations, non-discrimination testing; and what three other items?
Determine employee’s allocation of contributions and forfeiture
Determine an employee’s minimum benefit or contribution under the top heavy rules
Calculate the employers tax deduction
Compensation is limited to a dollar amount specified in this Internal Revenue Code:
401(a)17
401(a)17 is determined each _______
And the limit is applicable to any planer that begins during the ________
January 1st
Calendar Year
2023’s 401(a)17 limit is: $330k
2024’s 401(a)17 limit is: $345k
For a fiscal year plan, whose new plan year starts on June 1, what would be the 401(a)17 limit in place starting the new plan year- June 1,2023?
$330k
Besides identifying HCE‘s and key employees what are two other important uses of 415 compensation?
Calculating minimum benefits or contributions under top-heavy plans
Determining minimum contribution such as Gateway contributions that must go to participants and plans that use cross testing
The definition of compensation for allocating employer contributions must be 415 compensation, true or false?
False
Compensation used to perform non-discrimination testing, maybe, but is not required to be IRC 415 comp, true or false?
True
What are the three permissible definitions of 415 compensation?
Current includable compensation
W-2 compensation
340 one compensation (wages for income tax withholding)
Current includable compensation includes all wages, salaries, fees, and other amounts received by the employee for _________, but only to the extent includable in ________ _________.
Personal services
Gross income
Aside from direct compensation, such as wages, salaries, fees; what other supplemental wages are included in the definition of current include comp?
Overtime, bonuses, commissions, tips, fringe, benefits, reimbursements
