Course 4: Distributions Flashcards
A qualified plan must state the ______ ________ that are available to the participant or beneficiary. It must be either ______ or subject to the participant’s (or beneficiary’s) ______. The employer, or any other fiduciary or third party, may not have the discretion to choose the form of _______ to be made.
payment method, mandatory, election, payment
A ____-___ payment is made in a ______ sum to the participant or beneficiary. In a defined contribution plan, it is the value of the vested account balance as of the ______ date specified in the plan. Most plans value the accounts on a _____ basis but for those that do not they use the latest ______ date that precedes the date of the distribution.
Lump-Sum, single, valuation, daily, valuation
An annuity is a payment that is _______ for one lifetime or two lifetimes. If the annuity is for ___ lifetime, the payment period is the participant’s life or, in the case of an annuity that _______ after the participant’s death, the beneficiary’s life. If the annuity is for ___ lifetimes, the payment is for both the participant’s life and a surviving beneficiary’s life (that is, ______ _______ continue while either the participant or the beneficiary is alive).
guaranteed, one, commences, two, benefit payments
An annuity for ___ lifetime is often referred to as a _____ life annuity or a ______ life annuity. An annuity over ___ lifetimes is often referred to as a _______ ___ _______ ______. Annuity payments are usually level payments during the individual’s _______ and made on a regular basis, such as monthly, quarterly or annually.
one, single, straight, two, joint and survivor annuity, lifetime
A defined contribution plan is not able to pay an annuity directly from the account, because the account balance is subject to ______ ______ and the annuity must be able to guarantee a stream of payments for the relevant life or lives. If the participant lives longer than his or her life expectancy, or if ______ ______ are worse than expected, the participant’s account could be used up before the participant dies.
investment fluctuations, investment returns
if an annuity is to be paid from a ______ _______ plan, the plan administrator or trustee will purchase an annuity contract on the participant’s behalf from an ______ company so that payments can be properly guaranteed. The annuity contract may be held by the plan, and the plan can act as a _____ by receiving payments from the insurer and then transmitting them to the participant (or beneficiary), or the contract may be distributed to the participant, who will then receive the annuity payments directly from the insurance company. The latter approach is more common. If the annuity contract is distributed to the participant, it must be a ______ annuity, meaning it cannot be sold or otherwise transferred by the participant after distribution to another person
defined contribution, insurance, conduit, nontransferable
An annuity may be offered that provides a _______payment term, even if the individual dies sooner. For example, a life annuity with ten years certain means the annuity will be paid for the participant’s life but, if the participant dies before ten years have passed, the annuity payments will continue for the remainder of the ten year period ______ the date on which the annuity payments began. Payments during the ________ period that are made after the participant’s death are paid to the beneficiary.
guaranteed, following, guaranteed
An ______ _______ is a periodic payment, such as a monthly or annual payment, that is made for a specified period of time. The installment period might be a specified number of years or it might be based on a ____ ______ period. This period might be the participant’s, or a joint of the participant and a beneficiary. The ____ ______ period is usually taken from a table referenced in the plan document (e.g., the tables published in Treas. Reg. §1.401(a)(9)9, which are used for minimum distribution calculations). An installment payment is ___ _____for any particular lifetime.
Installment Distribution, life expectancy, lie, expectancy, not guaranteed
A defined contribution plan may make ______ payments directly from the trust. The amount distributed is usually determined by ______ the current vested account balance by the remaining payment term. For example, if a ten-year ______ payment is elected, and payments are made annually, the first payment would be ___-______ of the vested account balance, the second payment would be ___-______, the third payment would be ___-______ and so on, until the end of the ten-year term. The tenth annual payment would be the remaining vested account balance
installment, dividing, installment, one-tenth, one-ninth, one-eighth
Installment payment _______ may take a different approach. For example, it might provide for a specific ______ _______ (e.g., $10,000 per year) to be distributed, with any remaining balance distributed at the end of the payment term. The election might also provide for a specific dollar amount payment (e.g., $1,000 per month), without a _______ installment period. Under this latter met hod, the payments would continue until the vested account balance is _____ distributed.
elections, dollar amount, specific, fully
A defined contribution plan may purchase an ______ ______ that will provide the installment payments. When a defined contribution plan purchases an _______ ______ with the vested account balance, the installment payments typically will be a _______ amount paid during the installment term under the contract.
Annuity Contract, annuity contract, uniform
A plan might permit a participant to elect to receive only a ______ of his or her benefits. A ______ distribution of benefits is usually elected in the form of a ______ sum. The distribution of only a ______ of the participant’s benefit under a defined contribution plan is determined in the same manner as ____-___ distributions, except the amount being distributed represents only a portion of the participant’s vested account balance.
Portion, partial, single, portion, lump-sum
A participant may elect to receive a portion of his or her benefit in an ______ form or ______ form, as described above, but such elections are rarely made. When a participant elects a ______ distribution, he or she makes no election at that time for the rest of the benefit. How the rest of the benefit is distributed is ______ at a later date
Annuity, installment, partial, determined
______ withdrawals are always made in a single sum and the payment may not exceed the amount of the ______ need.
Hardship, hardship
A plan is required to provide a ______ _____ ___ ______ (QJSA), unless a specific exemption applies. The specific requirements for meeting the QJSA rules are detailed in IRC §___. If the QJSA rule applies to a participant, then the plan must follow certain ______ in determining how to pay the participant’s benefit. Parallefl requirements are found in ERISA §205, so these rules are also ______ under ERISA.
Qualified Joint and Survivor Annuity, 417, procedures, enforceable
