CPP Module 5

Question 1

When must a deferral election be made for a non-qualified deferred compensation plan?

Answer 1

By the end of the preceding tax year

Question 2

Qualified Retirement plan types

Answer 2

benefit plans or defined contribution plans

Question 3

401K Annual Compensation limit

Answer 3

$345,000

Question 4

401K Annual Contribution Limit

Answer 4

lesser of either $69k or 100% of the employee’s compensation for the year.

Question 5

Wait period for contributions to be eligible for transfer

Answer 5

As soon as they can be reasonably segregated from the company’s assets, but not later than 15th business day of the following month.

Question 6

403(b) Catch-Up Contributions

Answer 6

Up to an additional $7500 for employees at least 50 or with 15 years of service.

Question 7

403(b) Plans are for:

Answer 7

Public Schools and tax-exempt charitable, religious, and educational organizations.457(

Question 8

457(b) Plans are for:

Answer 8

public section employees/government4

Question 9

457(b) catch up contribution amount

Answer 9

$7500

Question 10

What is a highly compensated employee?

Answer 10

Receives compensation of at least $155k or was an at least 5% owner in the previous year

Question 11

401K Contribution W-2 Box and Code

Answer 11

12 - D: Deferred Compensation and check of box 13

Question 12

ADP Testing

Answer 12

Actual Deferral Percentage. Finding the ADP of highly compensated vs. non-highly compensated employees and determining the percentage in difference.

Question 13

Non-Qualified Retirement Plan taxation

Answer 13

Subject to FIT when failure to meeting Section 409A or when a distribution is made.
Taxable for FICA when services are performed or vesting requirements have met.

Question 14

Non-Qualified Plan Differences

Answer 14

Can discriminate in favor HCEs and has no compensation or contributions limits

Question 15

Qualified Retirement Plan Rules

Answer 15

1. Must be in writing
2. Be for the benefit of employees
3. Meet eligibility and vesting requirements
4. Cannot discriminate in favor of HCEs

Question 16

Roth 401K Taxation

Answer 16

Subject to FIT and FICA taxes. Reported on W-2 in Box 12 - Code AA

Question 17

Roth 401K W-2 Box and Code

Answer 17

12 - AA: “After All Taxes” and check of box 13

Question 18

Qualified Retirement Plan taxation

Answer 18

Only subject to FICA taxes.
Employer contributions are not taxable

Question 19

401K Annual Deferral limit

Answer 19

$23,000 for employees under 50. Additional $7500 for catch-up for those at least 50.

Question 20

What does Section 409A require?

Answer 20

Restricts distributions from nonqualified deferred compensation plans in certain circumstances and requires deferral elections to be made before the beginning of the calendar year.

Question 21

What does take in account mean?

Answer 21

a point in time when contributions to a nonqualified deferred compensation plan become taxable for SS and Medicare

Question 22

What happens if an ADP test fails?

Answer 22

All participants will be taxed on elective deferrals if the plan administrator does not take corrective action.